GFSC recognises use of technology in due diligence process

30 November 2015

The Guernsey Financial Services Commission (GFSC) has issued annexes to its handbooks for Financial Services Businesses and Prescribed Businesses on Countering Financial Crime and Terrorist Financing on the use of technology in the customer due diligence process.

The changes which have been made to the rules and guidance provide for the use of technologies such as digital signatures and electronic verification in the client take-on process and when due diligence documentation has to be updated, including where this technology is delivered through the internet or by tablet and smartphone applications.

Dominique Carpentier, Director at KYCme (Guernsey) Limited, said the changes represented an opportunity for Guernsey to become a recognised leader in the implementation of 'regulatory fintech' to improve efficiencies in dealing with global regulatory client identification requirements. KYCme is a secure online storage solution that allows for authenticating and storing valuable documents.

"This is a milestone in the way that regulated businesses can on board their clients, as they can now benefit from the speed, process efficiencies and security that electronic systems can introduce. Guernsey is the first offshore jurisdiction to introduce such guidance and the GFSC should be congratulated in listening to industry and recognising that regulated businesses can introduce smart technology whilst continuing to apply the same rigorous standards the Island has based its reputation on," said Mr Carpentier.

He added that it was also good news for individuals dealing with businesses that have adopted the technology.

"Gone is the requirement to provided reams and reams of duplicate and certified paperwork proving your residence and identity that is associated with opening a new bank account and moving house. CDD documentation can now be authenticated once and shared electronically with whoever needs it as many times as required at the click of a button."

The annexes to the handbooks encompass new rules stipulating that a firm must understand this technology if it is to use it and that it has evaluated that its use will result in compliance with the relevant regulatory requirements. The revisions to existing rules are intended to provide positive affirmation that new technologies have a part in this important process. 
The GFSC is not requiring firms to notify it that they intend to use new technology but it will monitor take up through the disclosures which firms are asked to make in the annual financial crime risk return.

The changes also include guidance for firms on the use of online utility bills to verify the address of Channel Islands residents. This new section has been issued as an annex to each handbook which includes amendments to three existing rules.

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