The State Bank of Vietnam (SBV) is completing the draft circular amending and supplementing a number of articles of Circular No. 23/2014/ TT-NHNN guiding the opening and use of payment accounts at payment service suppliers.
Implementing the guidance of the Law on money laundering prevention, the regulation stated that banks must meet face-to-face with customers when establishing the relationship for the first time. However, on November 14, 2019, the government issued Decree No. 87/2019/ ND-CP, including amendments to allow banks to decide whether to meet in person or not when first establishing the relationship. In case of not meeting face-to-face with customers, there must be measures, forms and technologies to identify and verify customers. “Therefore, Circular 23 needs to be revised to conform to the new provisions in Decree 87 above,” the drafting agency said.
In addition, on January 20, 2020, the prime minister approved the National Comprehensive Financial Strategy, allowing the application of simple and indirect customer identification process by online electronic method (eKYC) for opening accounts at licensed organisations to serve the needs of individuals and businesses paying small value”.
Therefore, the Draft builds and completes towards the principle that banks should establish a process and procedure to open a payment account without meeting with customers directly, in accordance with the provisions on prevention of money laundering, electronic transactions and other relevant law provisions. In addition, banks are allowed to decide on measures, forms and technologies to identify and verify customers, to negoatiate with customers on the scope of use, transaction limit of payment accounts but must ensure that the total transaction value limit does not exceed 100 million per month per customer, excepting some cases where specified.
In view of Can Van Luc Member of National Financial and Monetary Policy Advisory Council, the authority should not delay allowing banks to deploy eKYC. With 94 percent of banks investing in digital banking, most banks in Vietnam will shift to a digital business model instead of a traditional one. Business activities of digital banking and non-cash payment in Vietnam are expected to have great progress if the government soon guides and creates a legal corridor to strengthen the application of new technologies such as eKYC, cloud computing, and blockchain.
People’s habits of services have changed markedly after the Covid-19 pandemic when promoting online transactions more. Leaders of some banks said that online transactions at banks during and after the outbreak increased by 20-30 percent compared to before the outbreak. According to general director of Tien Phong Commercial Joint Stock Bank (TPBank), Nguyen Hung, the pandemic period has shown the importance of online channels in banking activities. As at TPBank, there are currently more than 200 LiveBank stations on the automatic banking channel. Through online channels, the bank still maintains a normal operation for customers during the pandemic. Those banks who are not ready to operate on online channels in the recent difficult period have much greater influence than the banks with good investment in this channel. “Therefore, the permission to deploy eKYC becomes urgent and has important implications for the bank’s business operations,” Hung emphasized.
Sharing additional benefits when deploying eKYC, TPBank’s leaders said that banks could use eKYC to score well for customers who have transactions on digital banks, and could mark customer behaviour that were repaid on time, delayed payment through the transaction history with the banks. In addition, deploying eKYC both saved costs and increased utility for users, so that banks could measure customer satisfaction. Through that, they adjust the products and services to both improve quality and reduce transaction risks.
Another reason, according to general director of Sai Gon Joint Stock Commercial Bank (SCB), Vo Tan Hoang Van, allowing the implementation of eKYC will encourage people to open more accounts, save processing costs for banks where the State has better control of cash flow. There are even reviews that eKYC can reduce financial crimes, and money laundering activities, because the level of living entity authentication and customer identification is more accurate.
However, in order to accelerate the implementation of eKYC, in addition to efforts from the banks, according to Hung, it is necessary to support and coordinate quickly and effectively from the related ministries and branches in the provision and sharing information on population data such as Ministry of Information and Communications, Ministry of Public Security, etc. eKYC’s early or late implementation depends not only on SBV, the readiness of banks, but also on the basis of National personal identification database. This request has been directed by the prime minister but needs to be further urgently from the Ministry of Public Security. According to the experts, it is allowed to conduct eKYC for account opening. In the future, it is possible to open deposit, payment services, and even loans.
Consulting firm McKinsey also recommends that banks initially be able to choose to apply eKYC with a specific product or service before applying massively. Due to the experience from many international markets, there may be risks and frauds when implementing eKYC.
