On Monday, the Bangladesh Financial Intelligence Unit (BFIU) introduced updated electronic Know Your Customer (e-KYC) guidelines aimed at simplifying customer onboarding for insurance companies and capital market intermediaries (CMIs) while reinforcing safeguards against money laundering and terrorist financing.
This new circular, which supersedes the previous guidelines issued in January 2020, applies to a wide range of financial institutions, including insurance firms, stock dealers, stock brokers, portfolio managers, merchant bankers, securities custodians, and asset managers.
The BFIU has set a deadline for financial institutions to implement the revised digital identity verification process by December 31, 2026. Key features of the new system include paperless onboarding, digital identity verification, and automated risk grading for individuals with valid national identity cards.
Fingerprint matching and facial recognition against the national identity database are the two main biometric models for onboarding customers. In addition, companies will be required to maintain a digital audit trail and store customer profiles for at least five years following the termination of a relationship.
Data must be stored on secure, locally hosted servers or private cloud platforms, with robust security measures in place to prevent unauthorized access or breaches.
Insurance companies and CMIs have the flexibility to adopt any technology solutions or operational models that suit their business environment. However, they must ensure full compliance with the procedural and control requirements outlined in the guidelines.
By implementing these measures, BFIU expects to streamline operations, reduce costs, promote financial inclusion, and safeguard the integrity of the country’s financial system.
The circular was directed to the managing directors and CEOs of all relevant institutions, including insurance companies, stock dealers, brokers, portfolio managers, merchant bankers, securities custodians, and asset management firms in Bangladesh.
