Nova Credit launches innovative cross-boundary KYC to help advance cross-boundary financial services

With the continuous growth of the financial market in the Guangdong-Hong Kong-Macao Greater Bay Area, cross-boundary KYC (Know Your Customers) is being regarded as a key component for prevention of various financial risks. Nova Credit and The Institute of Compliance Officers had therefore jointly organized a webinar on “Cross-Boundary KYC – A New Perspective”, which was successfully held in the afternoon of June 24. The esteemed guest speakers included Eva Kwok, Risk Advisory Partner, Deloitte and Stephen Kai-yi Wong, a practising barrister, ex-Privacy Commissioner for Personal Data. Cross-boundary KYC-related issues were elaborated and discussed with more than 300 financial professionals in the webinar.

The first survey in the webinar revealed that two-thirds of the participants believed “unable to validate customer identity and information, lack of customer profile and information, and complicated procedures” were the biggest challenges for cross-boundary KYC. The second survey looked into how well the industry understands the legislation of cross-boundary KYC. 90% of the participants were not familiar with the content and scope of application of Mainland laws and regulations. Meanwhile they also found it difficult to adapt to the rapid development of Central Government’s policies.

Eva Kwok, Risk Advisory Partner at Deloitte, added that the Mainland, Hong Kong and Macau are yet to share any personal data because of the different data and privacy regulations. Banks generally lack reliable and secure digital channels to verify the information provided by customers to meet KYC compliance requirements. As an example, for a Mainland customer opening a local bank account, the traditional KYC methodology is applied to verify the customer’s identity information. Cross-boundary verification supported by documents which would usually takes 8 to 10 working days to complete the basic approval process. However, if banks can deploy eKYC by verifying customer identity and information online with stringent network security and privacy protection measures, the approval process can be drastically shortened to approximately 20 minutes.

In addition, ex-Privacy Commissioner for Personal Data Stephen Wong Kai-yi, a practising barrister, analyzed the current principles for free and secure flow of cross-boundary information and the compliance framework that allows cross-border/ boundary data transfer from a legal perspective. He explained that despite Section 33 of the Personal Data (Privacy) Ordinance that regulates cross-border/ boundary data transfer is not in force, financial institutions in Hong Kong should adopt good practices when transferring personal data in the Greater Bay Area outside Hong Kong by obtaining the written consent of the data subject first and adopt the standard contract clauses recommended by the Privacy Commissioner’s Office. He also talked about the recent data protection laws in the Mainland including the Draft Personal Information Protection Law of China. It states that when personal information processors transfer personal data outside China (including Hong Kong), prior consent of the data subject must be obtained. Furthermore, the relevant authorities’ cyber-security evaluation or examination, the official authorization and the use of standard contract clauses must be complied with. He pointed out that these new regulatory measures are consistent with the guidelines recently issued by the European Union (EU), and would facilitate information flow in the Greater Bay Area. He also suggested companies should consider adopting standard contract clauses that comply with the requirement of the laws in the Mainland and the EU after consulting professional advice. 

Oscar Cheng, Business Strategy General Manager of Nova Credit, wrapped up the webinar by sharing the company’s innovative cross-boundary KYC solution. He elaborated that it will allow financial institutions in Hong Kong to verify identity and conduct customer due diligence through legitimate data sources in Mainland with explicit consent of Mainland customers. Apart from minimizing enquiry to customers and speeding up data verification process, it also ensures correct data entry and reflects the current status of customers. Nova Credit believes that the KYC solution will promote the overall development of the financial industry in the Greater Bay Area and speed up cross-boundary financial connectivity in the Guangdong-Hong Kong-Macao Greater Bay Area.

For the highlight video, please click here.