“Electronic Know Your Customer” (e-KYC) is the expression to describe the digitalization and electronic and online conception of KYC processes. This is a remote, paperless and cost effective process that minimizes bureaucracy in KYC procedures.
With the expansion of virtual banking a growing demand for e-KYC solutions has emerged. The pandemic is a further catalyst of digitalization. Many regulators have already issued guidance on remote customer verification to help financial institutions ensure business continuity. However the different e-KYC processes have to comply with regional and national anti-money laundering regulations.
The new Hungarian decree issued on 25 August by the Hungarian National Bank uses the terms of direct and indirect e-KYC replacing the former real-time and non-real time procedures. Strong Customer Authorization now is a requirement if the bank or the financial institution uses an indirect e-KYC process.
The decree specifies three types of processes of indirect e-KYC. It can either be done through the existing Hungarian KAU system (customer gateway “Ügyfélkapu” ), or a process that is capable of reading the authentic ID data identifying the client from an official identity card containing an electronic storage element, or in other ways. In this latter case however further restrictions apply. The third option “other ways” is not applicable for clients coming from high risk third countries or in case of a transaction reaching or above 27,777 EUR (10 million HUF) per transaction or if the cash withdrawal of a client exceeds HUF 300,000 per month.
The decree will come into force on 1st of October 2020.
Dr. Égertz Andrea ügyvéd 