In brief
- Six major UAE banks are building a know-your-customer blockchain platform.
- The platform has received a positive review from Moody’s Investors Service.
- The project aims to improve KYC compliance and prevent data theft.
American credit rating agency Moody’s Investors Service has deemed a know-your-customer (KYC) blockchain platform credit positive for financial institutions in the United Arab Emirates.
The new solution is being developed for a consortium of six major UAE banks in partnership with blockchain platform and applications provider Norbloc. Expected to launch in Q1 2020, the platform aims to improve compliance and lenders’ regulatory frameworks, according to local news reports.
“We expect the KYC blockchain consortium to support the asset quality of UAE banks primarily by reducing operational risk. The platform will facilitate faster and more secure on-boarding, and exchange of authenticated and validated digital customer data and documents through distributed technologies powered by blockchain,” the rating agency said.
Disregard for KYC regulations, especially in the fields of anti-money laundering and financing of terrorism, could lead to significant penalties and legal repercussions for banks, Moody’s noted.
The platform could ensure improved compliance with local and international KYC regulations while reducing the risk of data theft. The blockchain platform is designed to cut down the banks’ cost of managing paper-based KYC data.
“We expect other UAE-based financial institutions and licensing authorities to gradually join the platform, which has the potential to become an important component of the country’s digital ecosystem,” Moody’s concluded.
Currently, the consortium comprises six banks that control nearly 44% of the total banking assets in the UAE: Emirates NBD, Emirates Islamic (the Sharia-compliant subsidiary of Emirates NBD), HSBC Bank Middle East, The National Bank of Ras Al Khaimah, Abu Dhabi Commercial Bank and Commercial Bank of Dubai.
The Smart Dubai Department and the Central Bank of the UAE will oversee and regulate the consortium's operations.
As Decrypt reported in January, the Dubai Multi Commodities Center plans to establish its own “Crypto Valley” in the UAE, replicating a similar economic zone created in Switzerland.
In the past, Dubai has also partnered with German conglomerate Siemens to boost decentralized education, further proving the seriousness of its intent to become the first international economy running entirely on blockchain. With the new KYC platform, they seem to be on the right track.