BNM Allows MSBs to Use Non-face-to-face Verification Processes for Corporate Customers

BNM (Bank Negara Malaysia), the Central Bank of Malaysia, recently issued a new new policy document for MSBs (money services businesses) to allow them to use non-face-to-face(non-FTF) verification processes when onboarding corporate customers.

Let's recall that Malaysia successfully introduced e-KYC for individual remittance customers and money-changing businesses in 2017 and 2019 respectively. The scope of non-FTF now is expanded to include corporate customers.

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The new document sets out the minimum requirements and standards that an approved licensed MSB must observe in implementing non-FTF verification process to onboard corporate customers. This is to ensure effective and robust Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) control measures and systems are in place to safeguard the safety and integrity of money services.

MSBs must first obtain approval from their Board of Directors and the BNM prior to the implementation of non-face-to-face verification in corporate customer onboarding.

They must ensure and be able to demonstrate on a continuing basis that appropriate measures for identification and verification of the corporate customer's identity are as effective as that of face-to-face processes, and also implement monitoring and reporting mechanisms to identify potential ML/TF activities.

MSBs must undertake a mandatory verification method and at least one additional verification method that is relevant to the nature or business model of the corporate customers, BNM says.

Video calls to fulfill the mandatory verification requirement must be made on an unannounced basis. However, MSBs may first initiate an unannounced introductory phone call to the customer, followed immediately by a video call for the customer to show proof of business existence.

During the video call, MSBs may request the person to show proof of business existence such as signboard or inventories.

"Reporting institutions must ensure the systems and technologies developed and used for the purpose of establishing business relationships using non-face-to-face channels (including verification of identification documents) have capabilities to support an effective AML/CFT compliance programme," the document says.

BNM says it will take appropriate enforcement action against MSBs where it identifies noncompliance with the requirements in the policy document.

This may include orders to take corrective actions, the suspension or revocation of a license, or direct action against the MSB's directors, officers and employees.