Monetary Board to consider 3 shortlisted tech firms to develop PoC of blockchain-based shared KYC facility

2 July 2020 08:43 am - 1     - {{hitsCtrl.values.hits}}

A A A

  • Development of system to take up to 6-9 months 
  • RFPs to be floated later to select a firm to implement PoC
  • System to increase financial sector efficiency and improve financial inclusion

By Nishel Fernando 
The Monetary Board of the Central Bank (CB) will consider three shortlisted software development firms to develop a Proof of Concept (PoC) of a shared KYC (know-your-client) facility, based on blockchain technology, for the country’s banking sector.


In an open call, the CB last November invited tech firms to develop the PoC of a shared KYC system on a voluntary basis, which would allow the banking sector and the government to share and update customer data on a blockchain. 


“We invited software companies to develop a shared KYC PoC free of charge, as a national project. The response to join this project, both locally and internationally, has been extremely heartening and we are happy to say that we have finalised selecting suitable applicants to begin development shortly,” Central Bank Director Payments and Settlements 
D. Kumaratunge revealed. 


He was speaking at an event organised by LankaClear (Pvt.) Ltd in Colombo on Tuesday. 


Kumaratunge revealed that the CB received 36 applications for the project, including foreign tech firms. Following the evaluation process, the CB has shortlisted three firms, including one experienced foreign tech firm. 


After securing the approval of the Monetary Board, he said these three firms would start to develop the PoC of a shared KYC system. 


The system is expected to increase efficiencies in the financial sector while the CB expects it would support the efforts to increase financial inclusion in the country. 


Kumaratunge said that the development of the system may take up to six to nine months.


Upon the completion of the PoC, the developers are required to submit a report to the Payments and Settlements Department of the CB, which would be then submitted to the National Payment Council and subsequently forwarded to the Monetary Board for its consideration. 

Following the approval of the Monetary Board, Kumaratunge said the CB would float RFPs to select a firm to implement the PoC. 


“The party selected to implement the PoC will neither be prejudiced from applying for any subsequent commercial development of a shared KYC facility that may take place nor would the company obtain any preference due to their engagement in this POC development,” the CB said.


Kumaratunge noted that several banks have already given their consent to join this project.


A key benefit to the banking sector from this project would be the banks’ ability to quickly onboard new customers through such a shared KYC system. In addition, the banks could also potentially save the costs of verifying all the documents of new customers. 


As the KYC policy remains a crucial tool in combating the potential financial crimes, including money laundering and terrorist financing activities, some critics opine that relying on the KYC performed by one bank may not be reliable. 


Further, it may also present a legal complication as to which bank is responsible for breaching the anti-money laundering (AML) rules.


Meanwhile, the CB recently enabled digital on-boarding of customers, using digital KYC to be verified by banks subsequently, to ensure the customers have access to their bank accounts and digital payment mechanism amidst unexpected closure and travel restrictions due to the COVID-19 outbreak in the country
.

 

  Comments - 1

  • v Thursday, 02 July 2020 04:40 PM

    Dear SL CB: Please don't. Kind regards, V


Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment




The 20th Amendment Bill Lest We Forget

Strident calls were repeatedly made from many quarters for the 19th Amendment

Public transport 'side-laned'?

“Miss, mantheeru neethiya nisa api bus passen yanna one. Ithin drop eka par

Land acquisitions in Hanthana and Knuckles Mountain ranges

Sri Lankans will soon lose their opportunity to boast about the rich biodiver

Wanathawilluwa forest clearance: Whodunit?

Days after the Anawilundawa Ramsar Wetland, situated in Puttalam District, ma