Labuan Financial Services Authority (Labuan FSA) has issued a circular stipulating the minimum regulatory expectations placed on Labuan financial institutions (LFIs) that have adopted e-KYC as part of their digital financial services business operations.
e-KYC is essentially a digitalisation of the customer identification and verification process for client onboarding. With the acceleration in digitalisation, especially with the advancement in technology and heightened risk exposure from the COVID-19 pandemic, organisations are fast embracing technology to meet client expectations and their own operational needs.
One key highlight is that LFIs are allowed to choose any method of conducting their identification or verification process through e-KYC, as long as the e-KYC system is reliable, risk-based and unbiased in filtering the counterparties and virtual transactions.
e-KYC measures are an effective oversight in managing and addressing risks related to money laundering and terrorism financing. The adoption of e-KYC in Labuan IBFC is in line with the jurisdiction's aspiration for the market to embrace digitalisation in intermediating cross-border trade and investments.
Please find the guidance papers and principles appended to the above mentioned circular:
APPENDIX 01
Guidance for a Risk-Based Approach to Virtual
Assets and Virtual Asset Service Providers
APPENDIX 02
Guidance on Digital Identity
APPENDIX 03
Principles of e-KYC Measures
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