The Abu Dhabi Global Market (ADGM) has declared that the first phase of its blockchain-based electronic-Know-Your-Customer (e-KYC) utility project has been completed successfully.
The e-KYC project was launched in March of this year by a consortium consisting of Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Al Ansari Exchange, Al Fardan Exchange, First Abu Dhabi Bank, and UAE Exchange, with the Financial Services Regulatory Authority (FSRA) of ADGM taking the lead.
The goal was to test the operational and technological values of a blockchain-based KYC system, and have a framework that adapts to any form of business with a sustainable model.
CEO of the FSRA of ADGM Richard Teng said, “By harnessing the power of technologies such as blockchain, the e-KYC project has demonstrated tangible benefits that may be offered by an e-KYC utility for financial institutions in the UAE. In addition to enhancing KYC checks across the industry, the utility can achieve significant cost efficiencies and financial inclusion driven by unified KYC standards.”
After four months of trial, the review committee, along with auditing firm KPMG published a report detailing a “successful” first phase test of the e-KYC project.
As part of the development process, FSRA in consultation with the consortium also developed a “governance framework and business model on which the e-KYC utility can operate on an inclusive and sustainable basis”.
Four key insights were provided, one of which included the use of blockchain environment as an important facilitator of the e-KYC platform in determining the validity of KYC documentation: “Consortium members can successfully share and validate simulated KYC documentation and data updates about the client on the prototype in a secure environment, supported by blockchain technology.”
Another aspect of the report described the product as being compliant with up-to-date data protection requirements, stating that “individual clients can be empowered to decide how their personal data can be shared in the utility, enabling conformance with data protection (GDPR) requirements”.
After a satisfactory completion of the first phase, the second phase is to begin by facilitating SME access to banking services.
For Abu Dhabi, this is an important milestone for blockchain development, especially with regards to mainstream application in the traditional financial markets. On the cryptocurrency side of things, efforts towards standardizing the industry are also being considered, with Abu Dhabi’s head financial regulator calling for internationally-standardized regulations for cryptocurrencies to prevent both criminal activities and their negative impacts on the image of virtual currencies.
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