[ad_1]
The corporate blockchain software company R3 has recently completed a conceptual test of its Know Your Customer (KYC) application based on its blockchain platform Corda, the French financial institution RCI Bank and Services announced on December 3rd.
KYC requirements are part of the due diligence necessary to meet anti-money laundering regulations (AML), an important but time-consuming and expensive process used in the financial sector.
Twenty-six companies took part in the CordaKYC test, including the Allianz France insurer and the BNP Paribas and Société Générale banks. In June, R3 announced that a group of 39 companies in 19 countries, including Deutsche Bank, ABN AMRO and the Federal Reserve Bank of Boston, have concluded KYC transactions on its Corda platform.
The RCI Bank statement quoted David E. Rutter, CEO of R3, stating that its platform "allows users to have full control over their data, confident that they will not be shared with other parties unless they have given the their explicit permission and have the possibility to revoke this authorization at any time. "
In a March 2018 report by KPMG International, could the blockchain be the foundation of a viable KYC utility ?, the international audit, tax and advisory firm said:
"Knowing customer processes provides the backbone of anti-money laundering (AML) efforts to combat terrorist financing, helping to detect and prevent criminal behavior in the world." According to current estimates, more than $ 25 billion for the management of financial crime risk in the banking sector, most of which is due to KYC However, despite the crucial importance of these processes, KYC in many financial institutions is extremely inefficient, mired with processes time-consuming and labor-intensive manuals, duplication of effort and risk of error … At the same time, the tedious process, repetitive questions and long processing times create a frustrating experience for customers. "
In 2017 KPMG performed its own KYC conceptual test with the Singapore government and several banks, including HSBC.
The KYC verification process, which can take weeks to complete, can cost the largest institutions at least $ 500 million, according to a 2017 study by Thomson Reuters. He also found that 89 percent of the corporate clients interviewed had not had good experience and 13 percent even changed financial institutions as a result. Beyond that, customers often repeatedly undergo the process with different institutions and financial institutions are required to update data regularly.
Collecting and storing KYC information gathered from financial institutions such as banks and insurers in a secure blockchain would allow other institutions to cut administrative costs and burdens to rely on previously verified information without having to repeat an international organization according to ICASA magazine offering guidance, benchmarking and certification for systems of governance, security, auditing and insurance of IT systems.
"Once a bank receives a KYC from a new customer, it can then enter the same information into a blockchain that can be used by other banks and other accredited organizations," says the article. "Because the customer identification documents would be independently audited and verified, these organizations do not have to run KYC checks again, they can simply rely on the verification performed by the blockchain itself."
That said, ICASA highlighted some security issues related to a KYC blockchain solution, such as the ability of participants to protect private cryptographic keys and the need to verify the reliability of the institutions participating in the blockchain.
