Jamaicans can switch banks in 2 years – Clarke

The content originally appeared on: Jamaica News Loop News

Within two years, Jamaicans will be able to move their accounts from one financial institution to the next, under a centralised electronic Know Your Customer (eKYC) public utility system.

The initiative, which is being spearheaded by the Bank of Jamaica (BOJ), was announced by Finance Minister Dr Nigel Clarke during a ministerial statement in the House of Representatives on Tuesday.

Clarke said the system will achieve several objectives.

“By empowering account holders, it will boost competition within the banking sector, realise essential national digital and financial inclusion goals, while at the same time modernising regulatory oversight,” Clarke said.

He added that “This simplification will also boost compliance with anti-money laundering (AML) and countering the financing of terrorism (CFT) laws and regulations across the financial sector. It has advantages for commercial banks too, as, for them, it will result in a significant reduction in operational and administrative costs related to compliance management”.

The finance minister said the move was aimed at addressing and relieving a long-standing pain point for consumers of financial services in Jamaica. He remarked that the initiative has the potential to revolutionise the banking sector and bestow greater power and benefits on financial consumers.

“The idea is to use technology to streamline and thereby simplify the process for opening a bank account. It will also make it easier for every Jamaican wishing to do so, to be able to switch their account to the bank offering the best services and products. Achieving this vision requires the development and implementation of an electronic Know Your Customer or eKYC registry in Jamaica,” Clarke explained.

He emphasised that the eKYC will be more efficient than the current time-consuming system, whereby persons seeking to open a bank account have to produce various documents in a process that can take days or weeks.

He said the eKYC will achieve a shorter, smoother, simpler and hassle-free experience for the customer. And the finance minister highlighted that by collaborating with deposit-taking institutions and utilising KYC information currently dispersed among public sector entities, the BOJ will utilise opportunities presented by the 2019 amendments to the Proceeds of Crime Act. These amendments facilitate the sharing of KYC information across banks.

“As a result, the eKYC utility will streamline and expedite the processes of identifying, verifying, and maintaining customer identities within the financial services sector. This will greatly enhance customer experience and significantly improve AML/CFT compliance at both the entity and national levels,” said the finance minister. He added that will also enable the BOJ to achieve its inflation target.

“This initiative will boost competition in the banking sector, and thereby enhance the effectiveness of monetary policy, by enabling customers to easily move their accounts from one bank to another,” he continued.

Among the benefits for customers are faster account opening through: A simplified process; ease of switching banks in search of better service, more favourable rates, better financial products; customers will also experience improved security. The process will enhance security measures for customer data, ensuring that sensitive information is stored securely and accessed only by authorised parties.

Clarke said this will help to protect customers’ privacy and mitigate the risks associated with identity theft and fraud.

For financial institutions, the benefits include reduction in manual KYC process costs; faster customer onboarding; quick access to verified KYC data from the centralised registry, reduced compliance risks; and supporting consistent and accurate customer due diligence processes.

For the regulator, the benefits include enhanced oversight; better monitoring and analysis of AML/CFT risk typologies; standardised compliance; consistent KYC processes across financial institutions; alignment with FATF Recommendations; and strengthened efforts against money laundering and terrorist financing, thereby enhancing financial system integrity.

The finance minister said that in moving forward, the BOJ will be consulting widely with the financial sector.

Support for research and framework development is being provided by the World Bank.