On February 19, Dubai Economy announced that it and six leading banks in the United Arab Emirates (UAE) — Emirates NBD, Emirates Islamic, HSBC, RAKBANK, Abu Dhabi Commercial Bank (ADCB), and Commercial Bank of Dubai (CBD) – have formed “a consortium for sharing of verified KYC (Know Your Customer) data between banks and licensing authorities in the UAE.” Dubai Economy stated that the consortium, known as the “KYC Blockchain Consortium” (Consortium) is part of its strategic focus “on enhancing ease of business in Dubai and supporting the smart transformation of the emirate’s economy.” It also characterized the Consortium as facilitating “a faster, more secure onboarding and exchange of digital customer data and documents through advanced blockchain-powered distributed technologies, a first of its kind in the region.”
The Consortium, as Dubai Economy described it, “will drive the mutualisation of KYC efforts among existing and future ecosystem participants” on a common KYC platform. After launching in the first quarter of 2020, that platform will be open for additional qualified financial institutions and licensing authorities to join.
In the future, Dubai Economy expects that the blockchain will improve ease of doing business and overall regulatory compliance in the UAE. The Smart Dubai Department, which is responsible for facilitating Dubai’s “smart” transformation, is slated to play, in collaboration with the UAE Central Bank, “a pivotal role” in overseeing and regulating the Consortium’s operations.
Note: The Dubai Consortium is the latest in a series of financial-sector efforts over the past year to establish KYC data-sharing platforms at the national level (such as the Netherlands) and regional level (such as the Nordic banks). As international money laundering operations have become increasingly complex and sophisticated, it is increasingly unrealistic to expect that financial institutions can effectively conduct their regulatory anti-money laundering and counter-terrorist financing programs by referring only to their own internal KYC data. Other nations and regions, including the United States, need to move more expeditiously in identifying the legal, technological, and policy challenges associated with multiple-bank KYC data-sharing platforms, and then working to bring such platforms to fruition.