Moody’s Investors Service Asserts KYC Blockchain Platform Is Credit Positive
Moody’s Investors Service, an American credit rating agency, has deemed a know-your-customer (KYC) blockchain platform credit emphatic for financial institutions in the United Arab Emirates.
The new solution is being created for a consortium of six significant UAE banks in association with the blockchain platform and applications provider Norbloc. Presumed to launch in Q1 2020, the platform intends to enhance compliance and lenders’ regulatory frameworks, according to local news reports.
“We expect the KYC blockchain consortium to support the asset quality of UAE banks primarily by reducing operational risk. The platform will facilitate faster and more secure on-boarding, and exchange of authenticated and validated digital customer data and documents through distributed technologies powered by blockchain,” the rating agency stated.
Disregard for KYC regulations, particularly in the fields of anti-money laundering and funding of terrorism, could lead to notable penalties and legal repercussions for banks, Moody’s remarked.
The platform could assure enhanced compliance with local and foreign KYC regulations while decreasing the risk of information theft. The blockchain platform is created to decrease down the banks’ price of managing paper-based KYC data.
“We expect other UAE-based financial institutions and licensing authorities to gradually join the platform, which has the potential to become an important component of the country’s digital ecosystem,” Moody’s concluded.
Recently, the consortium involves six banks that control approximately 44% of the total banking assets in the UAE: Emirates NBD, HSBC Bank Middle East, Emirates Islamic (the Sharia-compliant subsidiary of Emirates NBD), Abu Dhabi Commercial Bank, The National Bank of Ras Al Khaimah, and Commercial Bank of Dubai.
The Central Bank of the UAE and the Smart Dubai Department will manage and regulate the consortium’s operations.
As Decrypt published in January, the Dubai Multi Commodities Center intends to build its own “Crypto Valley” in the UAE, replicating a comparable economic zone created in Switzerland.
In the past, Dubai has also collaborated with German conglomerate Siemens to promote decentralized education, besides proving the gravity of its intention to become the first international economy working entirely on blockchain. With the new KYC platform, they appear to be on the right track.