All banks and financial institutions must arrange an electronic Know Your Customer (e-KYC) system for their clients by December 2020
Opening a bank account currently requires copious amounts of paperwork be filled out, but soon, people will be able to open an account simply by providing their fingerprints. Banks will be able to collect clients' data from the National Identity Card (NID) database to fill out the required forms – matching the data to fingerprints or an iris scan.
All banks and financial institutions must arrange this electronic Know Your Customer (e-KYC) system for their clients by December 2020.
On Wednesday the Bangladesh Financial Intelligence Unit (BFIU) of Bangladesh Bank, issued a guideline to introduce this system for: banks, non-bank financial institutions, insurance companies, stock dealers and brokers, portfolio managers, merchant bankers, security custodians, asset managers, plus other companies run with the approval of the central bank.
In the new system, one will also be able to open a bank account from one's home by proving one's NID information through the e-KYC system provided by banks' websites.
However, those who do not have NIDs will not be able to use this facility.
The banks may also create a system to identify clients by their iris, reads the guideline.
The new system will help to eradicate money laundering and financing for terrorists, the BFIU expects.
In August last year, Finance Minister AHM Mustafa Kamal initiated this system to ease the process of opening a bank account.
The ministry, last week, sent a two-page specimen of an account-opening form to the central bank asking all banks to introduce a uniform precise e-KYC format.
Later, a committee led by the central bank's Executive Director AKM Fazlur Rahman prepared a policy to introduce the new bank account opening system.
The central bank's Banking Regulation and Policy Department, Financial Inclusion Department and Bangladesh Financial Intelligence Unit worked together to prepare the e-KYC format. The Payment Systems Department also provided its input.
Fazlur Rahman told The Business Standard, "Guided by the finance ministry, we have tried to make the account-opening procedure easier for disadvantaged people."
Speaking to The Business Standard, Dr Atiur Rahman, former governor of Bangladesh Bank, praised the initiative. The pioneer of financial inclusion said, "This e-KYC will be very helpful not only for financial inclusion but also for ensuring financial security. Since adequate and authentic information about clients will be available to the banks, money laundering will decrease too."