IFC, BFIU to build infrastructure to fast-track financial inclusion

The International Finance Corporation (IFC) and Bangladesh Financial Intelligence Unit (BFIU) will work together to develop an electronic know your customer (eKYC) infrastructure to fast-track financial inclusion.

The eKYC is a foundational regulatory arrangement for conducting customer due diligence during new client on boarding process for collecting and verifying customer data electronically.

This is required during opening of new accounts at banks, non-bank financial institutions, mobile financial service providers, insurance companies, and capital market intermediaries, BFIU said in a statement today.

Once in place, the eKYC infrastructure will not only cut time and cost of client on boarding, but it will help reach more customers digitally, thus, reducing the number of unbanked people, according to the statement.

The project will contribute to the financial inclusion agenda of the government of Bangladesh as well as IFC's target of including an additional 30 million unbanked adults in the country by 2030.

BFIU, an independent government agency charged with investigating suspicious transactions and money laundering, is also the central agency for ensuring KYC/eKYC compliance.

BFIU is expected to issue a comprehensive eKYC regulatory guideline for the financial sector by December 2024.

Along with establishing a regulatory infrastructure, the eKYC project will also deliver data analytics, case studies, knowledge creation and dissemination and awareness building in the financial market.

IFC estimates that 500,000 people will be covered by the e-KYC system by end of the project implementation period in 2025.

"Financial sector especially financial institutions are experiencing a drastic process of digitalization. This digital transformation enables easy access of customer, even from the remote location, into the financial services," said Md Masud Biswas, executive director and deputy head of BFIU.

"This may pose some underlying risk of money laundering, terrorism financing and related criminal activities by abusing financial institutions and its services. To minimise such risk of financial sector e-KYC can be one of the most optimal solutions."

"Promoting financial inclusion is one of the priorities for IFC's work in Bangladesh," said Qamar Saleem, IFC's regional manager advisory services for financial institutions group in Asia and Pacific.

"The implementation of eKYC infrastructure will offer seamless experience for end users and support the financial sector to reach out to last mile customers in Bangladesh, significantly increasing access to financial services."