In 2022, the European Banking Authority issued Guidelines on the use of Remote Customer Onboarding Solutions. These guidelines aim to clarify permissible practices within the digital remote context and will be enforceable for financial institutions starting October 2, 2023.
Before selecting a remote customer onboarding solution, financial institutions should carry out a pre-implementation assessment, which includes:
- Evaluation of tool’s accuracy and completeness of collected data
- Risks posed by the use of the solution and possible mitigation measures, including ML/TF, operational, reputational, and legal risks
- Solution’s susceptibility to fraud (e.g., impersonation), information and communications technology, and security risks
- Tool testing on customers, products, and services identified in policies and procedures
According to the EBA Guidelines, remote customer onboarding policies and procedures should be risk-sensitive and include at least the following:
- General description of customer identification solution, explaining its features and functionality
- Description of customers and services that are eligible for remote onboarding
- Which steps are fully autonomized and which require human intervention
- Controls to ensure that the first customer transaction is executed only when all customer due diligence measures have been applied
- Employee training on the remote customer onboarding solution
- Description of what customer information is entered manually by the customer; automatically captured from the documentation provided by the customer; gathered using other internal or external sources
Lastly, financial institutions are expected to perform ongoing monitoring/testing of the remote customer onboarding solution on periodic and ad-hoc cases. Remedial steps should be taken for any shortcomings identified while using the tool.
Considering the requirements set by the EBA Guidelines, ECOVIS ProventusLaw recommends updating the AML/CTF documentation and performing testing of the used customer onboarding solutions to ensure full compliance with the EBA Guidelines and Lithuanian regulations.
Prepared by Vilius Neverdauskas, Associate of ECOVIS ProventusLaw