The Bank of Thailand (” BOT “) has introduced a new regulation to facilitate the Know-Your-Customer (KYC) process by using an electronic means (” e-KYC “) for account opening for deposit acceptance or fund acceptance from public.
KYC is one of the required processes imposed on financial institutions and certain types of reporting entities under the anti-money laundering law (AML law). For financial institutions, they need to comply with both the KYC process under AML law and the criteria issued by the BOT as the supervising regulator.
A. e-KYC under BOT Regulation
The BOT issued the BOT Notification No. SorNorSor. 7/2559 Re: Criteria in Taking Deposits or Taking Money from the Public, which became effective on 3 August 2016, of which the key requirements are summarized below.
e-KYC procedures must have the same standards as the KYC procedures usually conducted where the relationship is established face-to-face.
Account opening for deposit acceptance or fund acceptance from public via an electronic means can only be available for ” individual customers” . Electronic means include (i) financial institution’s electronic devices such as virtual teller machine, kiosks, computers, or other electronic devices; (ii) customer’s electronic devices such as computers, mobile phones, installed with the financial institution’s application.
Since account opening for deposit acceptance or fund acceptance from public via an electronic means is considered a use of new technologies in the provision of banking services, financial institutions must obtain a prior approval from the BOT .
2. Permissible method/technology:
For account opening via an electronic means, financial institutions must use the method that can replace face-to-face interaction. The financial institution must ensure that the staff of the financial institution can interview and observe the customer’s behavior on a real-time basis. Currently only “video conference” system is specified as a permissible method/technology. Other methods/technologies will only be allowed if a specific approval from the BOT is obtained on a case-by-case basis.
3. Electronic document and electronic signature :
Financial institutions can accept KYC documents in the form of electronic data under the law on electronic transactions. Electronic signature under the law on electronic transactions are also acceptable as customer’s signature.
4. Verification of customers’ information and identification documents :
a. For account opening via financial institution’s electronic device, the verification must be done by using either:
(i) smart card reader (with supplemental verification through the system of relevant government authority that verifies information and ID cards or the system that verifies fingerprints (optional)); or
(ii) the system of relevant government authority that verifies information and ID cards along with the system that verifies fingerprints information and ID cards along with the system that verifies fingerprints
b. Where customer’s electronic device and financial institution’s application are used, the verification must be done by approach (4)(a)(ii) above.
c. Other methods/technologies used for verification requires a specific approval from the BOT on a case-by-case basis.
5. Record Keeping
Financial institutions must keep the information and KYC documents or their copies, as well as images, sound recordings, and transaction logs, in accordance with the record keeping period under AML law.
B. KYC/CDD under AML law
Reporting entities including financial institutions must also comply with KYC and Customer Due Diligence (CDD) requirements under the AML law. Regardless of whether or not transactions are related to account opening for deposit acceptance or fund acceptance from public, for any transactions or relationships that are initiated via an electronic means, financial institutions must also comply with certain requirements applicable to non-face-to-face KYC process and other requirements generally applicable for KYC/CDD processes under AML law.
C. Future of e-KYC
The BOT has set out in the Financial Sector Master Plan III (2016-2020) that it will cooperate with relevant government entities to support the access and data connection to the civil registration and the interconnection among financial institutions and e-payment service providers. The relevant authorities will together stipulate e-KYC policies from all aspects e.g. legal and IT infrastructure in order to facilitate electronic transactions and services.
We will continue to provide updates on e-KYC as well as AML law and law on counter-terrorism financing, which are becoming increasingly important, in other aspects as well. For more comprehensive information, please contact our team at Baker & McKenzie.