'Know your customer' utility experiment hits snag

Setting up a service to allow financial institutions to verify potential customers' details in a more seamless way is proving a hard nut to crack.

The know-your-customer (KYC) utility aimed to create a more efficient way of checking against sanctions and blacklists.

That in turn could have fundamentally improved the now-laborious methods banks employ to block illicit funds flowing through the banking system.

The aim had been to put the KYC utility in place this year but it has hit snags.

Monetary Authority of Singapore managing director Ravi Menon said the challenge has come down to cost rather than technology. He noted that greater complications arose from streamlining KYC processes for corporates than individuals. Banks would have to figure out the beneficial owners of entities such as shell companies, which creates complications in establishing credentials.

Individuals, on the other hand, can already sign up with banks and fintech firms quicker than before. Indeed, several financial firms now offer instant online verification, by tapping MyInfo, the central data repository.

The KYC idea was announced last year, with Mr Menon saying then that it would be "transformative". Besides harmonising and enhancing KYC checks across the industry, the service was meant to raise the quality of risk management while reducing costs and processing time.

A version of this article appeared in the print edition of The Straits Times on October 13, 2018, with the headline ''Know your customer' utility experiment hits snag'. Print Edition | Subscribe