Russian Bank Tests International KYC Solution Based on Blockchain
In an official press release on Wednesday, July 11, Russia’s Alfa Bank announced that it has successfully tested an international KYC based on the distributed ledger technology (DLT). The Alfa Bank JSC is one of the largest private financial institutions in the country and also a member of the R3 blockchain consortium.
The bank said that this service is an open-source blockchain project designed for businesses and based on the Corda platform. Moreover, as a part of this user-identification system, members of the R3 Consortium across the globe will be able to easily exchange the client database.
As a result, all the member financial institutions of R3 will gain shared access to corporate accounts data, which is in a way mandatory to implement the KYC procedures. Moreover, KYC has now become a mandatory process in majority of the countries as it helps to transparency and prevent acts of money laundering.
Moreover, many of the cryptocurrency exchanges have global operations. Thus having a global KYC process will streamline the process of customer data verification for banks. Currently, the data is scattered and banks need to check the same data several times. This makes the process tedious who have to submit the same details several times to different banks.
Under this new blockchain-based system, all the data will be available under a single database. This will help the banks to speed up their financial transactions while saving costs at the same time.
The testing of this blockchain-based international KYC system has been performed under 40 R3 Consortium members including some regulatory bodies and banking institutions like Central Banks of Peru and Columbia, BNP Paribas, Deutsche Bank, UBS, Societe Generale, and ING.
Dmitry Ustinsky, head of the international compliance department at Alfa-Bank said: "Similar solutions are being worked out in Russia as well, in particular, the CBR pointed to their demand. The pilot's experience with R3 is certainly interesting for improving KYC procedures in the Russian legal field. The project is also an example of Russia's successful integration into international technology trends. At the site of the R3 consortium, Alfa-Bank, in conjunction with the leading players in the global financial market, is testing new solutions for the blockhouse, the conceptualization and development of which will benefit the entire banking sector in Russia.”