Simplified KYC rules yet to benefit small businesses, says Wignal
Simplified KYC procedures should not be viewed as an exemption from sound customer due diligence measures – BOJ
Published:Wednesday | September 9, 2020 | 12:05 AM
Despite the gazetting of regulations that are meant to make it easier for small businesses and the unbanked to open, operate and maintain bank accounts, The MSME Alliance, a grouping of small and micro businesses, says they are still facing onerous know-your-customer, or KYC, requirements.
President of The MSME Alliance, Donovan Wignal, said the matter is still being discussed, and requires engagement with both the Jamaica Bankers Association and the Bank of Jamaica, BOJ.
“But as far as I can see, and based on my experience and the experience of other members, all the requirements that previously existed are still being required when we are applying to open a bank account,” he said.
“The very, very long and bureaucratic KYC requirement was looked into, and I think what they wanted to introduce was a tiered KYC approach, where persons are treated subjectively when the applications are made. I would only have to judge if it was actually implemented by the current action of the banks, and I have no report that it’s any easier to open a bank account than it was six months ago,” he added.
Last year, Minister of Finance Dr Nigel Clarke reportedly noted complaints among the unbanked about the procedures they have to fulfil to open, operate and maintain bank accounts and that it poses a high burden and a high barrier to entry for many people.
According to the Proceeds of Crime (Money Laundering Prevention) Regulations published in the Jamaica Gazette on October 29, 2019, the simplified due diligence procedures include, among other things, the requirement for only one form of government-issued identification from the applicant for the business concerned, or accepting forms of identification other than government-issued identification; accepting identification verification from third parties who are under analogous obligations with respect to customer identification and transaction-verification procedures as concerns the prevention of money laundering; collecting only basic identification information, such as names, addresses and dates of birth or, in the case corporate bodies, dates and places of incorporation.
The BOJ says the 2019 legislative amendments allows financial institutions to apply simplified due diligence where the institution has made a determination, based on the risk appetite of its business, the risk profile of the proposed customer and taking into account the design of the product, that there is a low risk of money laundering.
The central bank added, however, that the simplified KYC procedures should not be viewed as an exemption from sound customer due diligence measures.
The BOJ said it formally wrote to all its regulated entities in January 2020, advising of the legislative amendments to the Proceeds of Crime Act and attendant regulations, and encouraged them to revisit their internal risk-assessment policies and procedures to be consistent with the provisions of the law.
Additionally, the BOJ said, it is in ongoing dialogue with the industry through a range of channels, including a standing meeting with the Jamaica Bankers Association and presentations to the Private Sector Organisation of Jamaica.
Those discussions are meant to assist financial institutions in the redesign of their respective policies and procedures to align with the new provisions in the law.