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IAMAI To Set Up A Board To Ensure Voluntary Compliance With AML & KYC

Richard Marley
June 02, 2021
2 minutes read
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New Delhi: On Tuesday, June 1st, the Internet and Mobile Association of India (IAMAI), announced plans to set up a board to ensure regulatory compliance. For this purpose, the IAMAI will create a self-regulatory code of conduct that will require all cryptocurrency exchanges to voluntarily stay compliant with AML/CFT and KYC regulations, as well as other company and taxation laws.

According to the IAMAI, the board will consist of fintech compliance specialists, eminent jurists, and technical specialists.

These plans have come forth in the aftermath of RBI’s clarification related to banks and cryptocurrency exchanges. According to RBI’s new guidelines, the 2018 circular banning crypto transactions is no longer valid, and banks are advised to continue performing Customer Due Diligence when dealing with Virtual Currency (VC) transactions.

This clarification from the RBI was well-received by the IAMAI and BACC (Blockchain and Crypto Assets Council), as both bodies believe this would put an end to all speculations that banks would be stopping crypto transactions from 6th June 2021.

According to industry estimates, the total number of crypto investors in India exceeds 15 million, all of which hold an accumulated amount of Rs.10,000 crore worth of digital assets. Thus, for the long-term sustainability of this industry, it is crucial for cryptocurrency investors and platforms to comply with global regulatory standards.

Why This is Good News

Given that India hosts one of the best tech ecosystems worldwide, building on crypto technology is a bus that they cannot miss. To enhance the growth of this sector, specific regulations are inevitable. With the right check and balance system, compliance with AML/CFT and KYC regulations, the backing of the government, and ever-increasing adoption of the internet, India can undoubtedly become the hub of blockchain innovations.

Disclaimer: No warranty is herein provided that the information contained in this document is accurate, up-to-date, and/or complete. In no circumstance(s), does such information constitute legal or any other advice. Any person who intends to use, rely, pass-on, or re-publish the information contained herein in any way is solely responsible for the same. We suggest to verify the information and/or obtain expert advice independently if required.

Latest News

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New Crypto Regulations to be Followed by Korean Banks
Why This is Good News
South Korea is increasing cryptocurrency regulations by making KYC verification necessary along with other licensing requirements.

Banks that deal with crypto customers in South Korea will now be facing new regulations. The FSC (Financial Services Commission) announced on Sunday that banks will have to classify cryptocurrency customers as “high-risk” entities, making them subject to robust KYC (Know Your Customer) and monitoring rules.

The new FSC guideline also makes it mandatory to report any high-volume transactions made by suspicious entities.

This means that banks will have to report suspicious transactions and maintain KYC compliance prior to partnering with cryptocurrency exchanges. A Korea Times report stated that South Korean banks are already looking for ways to minimize regulatory risks that emerge from dealing with cryptocurrency exchanges. In order to safeguard against crypto-related risks, the Korea Federation of Banks has called a meeting to discuss new rules and practices.

Additionally, Crypto exchanges in South Korea are also mandated to seek a register with the KoFIU (Korea Financial Intelligence Unit), the anti-money laundering (AML) state agency, prior to September 24, 2021. After this date, the KoFIU will assess the legality of their operations for three months.

The report also revealed banks will be required to deny services to clients that do not comply with KYC requirements or fail to report suspicious activity to the FSC’s anti-money laundering unit. Exchanges will have to terminate transactions made by accounts that are not based on real names.

Out of 60, only four exchanges are currently implementing real-name identity verification, while others are operating on a pseudo-name basis for crypto clients.

South Korea has supported cryptocurrencies over the years. However, the latest developments in the world of crypto have marked the return of the so-called “Kimchi Premium” which was a price increase of 26% for cryptocurrencies. This premium led to intense regulatory scrutiny and a major crackdown on illegal trading activities across foreign exchanges.

International regulatory bodies, such as the Financial Action Task Force (FATF) have strongly recommended the implementation of KYC regulations and robust transaction monitoring standards to mitigate the risk of financial and identity fraud.

Given that cryptocurrency platforms now fall under the definition of financial institutions, they too are liable to perform KYC and AML (Anti-money Laundering) procedures.

Recent Posts

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eIDAS and eIDs - The Shift in Identity Verification in the EU & Beyond
Why This is Good News
In the digital world, ensuring the security of international transactions is the ultimate goal of all companies. The European Union’s eIDAS or Electronic Identification and Trust Services legislation monitors identity verification, authentication and electronic transactions in the region. This legislation allows secure cross-border transactions and removes all digital barriers. Moreover, creating a predictable regulatory environment for a secure and swift electronic transaction system is a lot easier with eIDAS.

Let’s take a look at how identity verification has shifted in the EU.

What is an eID?

In the high-speed digital space we live in, the conventional government-issued ID documents like passports and ID cards are no longer effective. So, electronic or chip-based ID documents are now in use in many countries. The chip in this document contains all data about the individual allowing seamless ID authentication and verification in organisations.
Impact of the eIDAS Regulations

The regulations from the eIDAS:

Ensure that everyone can use their electronic IDs to access public services available in any EU region

Create an international market for trust services like e-signatures, e-seals, time stamps, etc. by ensuring that they will work across borders along with the same legal status as the paper-based ones

EIDAS Regulations for the United Kingdom

The electronic identification and trust services for e-transactions in the internal market are regulated by the eIDAS regulation 910/2014. However, the UK adopted eIDAS regulation and altered the regulations post-Brexit. Additionally, the Electronic Identification and Trust Services for Electronic Transactions Regulation 2016 was also changed. Now, these guidelines are referred to as the UK eIDAS laws.

Companies offering trust services in the EU have to comply with eIDAS laws of the European Union. This also includes operations under the supervision of a regulatory body from a different EU state.

Amalgamation of eIDAS and AMLD – Digital Single Market

The EU created a ‘Digital Single Market’ by incorporating Anti-Money Laundering (AMLD) with the eIDAS regulations. The digital single market brings uniformity in customer onboarding. Organisations across the European Union can remotely verify customers making customer onboarding frictionless.

The eIDAS regulation article 920/2014 provides AMLD with the control to verify and onboard clients in a safe, simple and remote way by removing all barriers in the customer acquisition process.

Suggested: | 6AMLD of EU – A detailed insight

The Legislative Framework for ID Verification by eIDAS

As per the eIDAS regulations, standards for digital identification are:

Create a credible ecosystem with maximum technical sureties to secure individuals and companies

Article 24 of the legislation avoids the personalisation act before getting a certificate in the Registration Entity and allows identity verification through video calls (generally called the video KYC process)

Consequently, it allows new licenses in eIDAS laws that lead to new digital identity verification mechanisms without harming the security of the processes

The eIDAS laws introduced digital identity verification methods for the first time in history. This reduces the physical interaction between companies and customers

The financial and telecommunication sectors are now capable of acquiring customers digitally anytime. The framework established by the eIDAS is entirely new for organisations and end-users

Apart from all these, eIDAS and AMLD5 together have reduced costs and saved time along with a great user experience during the customer onboarding process

Interoperability of eIDs as per eIDAS

Given the differences in eIDs across countries, the main goal of the eIDAS is to remove all sorts of barriers for identification. For instance, an individual with an Italian eID residing in Estonia should not be bound to use the Estonian eID. To ensure interoperability of the eIDs, the eIDAS is working on an IT infrastructure called eIDAS nodes.

Shufti Pro’s IDV Suite – Answer to the Shifting ID Verification Trends

Electronic or eIDs have changed the identity verification game. Now, customers believe in the digital process rather than physically visiting the company. However, the change in identity verification is not a problem anymore. Shufti Pro offers multiple alternatives for one problem. Although all our ID verification services are remote, there are two options that can help every firm irrespective of their industry. Let’s take a look at both of these:

1. NFC-based ID Verification

The chip in eIDs allows businesses to verify the identities of end-users in the blink of an eye. NFC-based identity verification validates identities through a tap on an NFC-enabled device.

Here’s how the process goes:

2. Video Interview KYC

Video KYC is another remote identity verification solution that we offer. During the video KYC process, the end-user gets in touch with the KYC expert on a live video call for authentication. The process has seven simple steps:

End-user registers on the company’s platform for KYC

KYC expert and the end-user get in touch on a live video call

The expert interviews customers for liveness detection

End-user shows the government-issued ID documents during the call

The document is verified for forgery and tampering

The face of the end-user is matched against the image on the ID document

Verification results are delivered and stored in the back-office

Note that the process is lengthy but takes only a minute or two to complete.

In a Nutshell…

Electronic or biometric identities are now a more convenient option for identification. The eIDAS issued guidelines on remote identity verification and seamless cross-border transactions in the European Union. The interoperability of eIDs across member states is still under consideration. However, eIDAS is working on an IT infrastructure to remove hurdles for cross-border use of eIDs. The laws also state multiple methods for remote identity verification and fortunately, all of Shufti Pro’s identity verification solutions validate IDs remotely. The two most appropriate services for the EU member state and the UK are Video Interview KYC and NFC Verification.

For more information, get in touch with our experts.

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IAMAI To Set Up A Board To Ensure Voluntary Compliance With AML & KYC

Why This is Good News

Impact of the eIDAS Regulations

EIDAS Regulations for the United Kingdom

Amalgamation of eIDAS and AMLD – Digital Single Market

The Legislative Framework for ID Verification by eIDAS

Interoperability of eIDs as per eIDAS

Shufti Pro’s IDV Suite – Answer to the Shifting ID Verification Trends

1. NFC-based ID Verification

2. Video Interview KYC

In a Nutshell…

Let’s prove your

customer’s identity

with Shuftipro.

Let’s prove your customer’s

identity with Shuftipro.

IAMAI To Set Up A Board To Ensure Voluntary Compliance With AML & KYC

Why This is Good News

What is an eID?

Impact of the eIDAS Regulations

EIDAS Regulations for the United Kingdom

Amalgamation of eIDAS and AMLD – Digital Single Market

The Legislative Framework for ID Verification by eIDAS

Interoperability of eIDs as per eIDAS

Shufti Pro’s IDV Suite – Answer to the Shifting ID Verification Trends

1. NFC-based ID Verification

2. Video Interview KYC

In a Nutshell…

Let’s prove your

customer’s identity

with Shuftipro.

Let’s prove your customer’s

identity with Shuftipro.