Central Bank of Sri Lanka begins research on blockchain-based shared KYC system

1. The central Sri Lanka company has started to develop a proof of concept (POC) for the integrated blockchain-based Know Your Customer (KYC) system.

2. This approach aims to improve the digital accounting of the country.

The Central Bank of Sri Lanka has started to develop a proof of concept (POC) for the blockchain-based 'know your customers' (KYC) system.

To this end, the Central Bank of Sri Lanka has partnered with the local Sampath Bank, the IT department at the University of Colombo, Swedish blockchain startup Norbloc AB, and local tech company Yaala.Labs and Lineearsix.

The decision to improve the country's financial digital infrastructure. Central Bank of Sri Lanka President W. D. Lakshman said measuring the feasibility of KYC blockchain integration could make digital market integration in Sri Lanka “meaningful”.

“The KYC partnership seeks to find ways, through the use of digitization and remote integration, to access financial services,” he added.

KYC integration enables faster identification of bank users from public data, enabling faster financial transactions. However, this type of system faces many problems and risks, such as money laundering (if there is a problem with the KYC banking process, it may affect other integrated banking services), supervision (e.g. , the EU General Data Protection Regulation). is. Requires user approval (sharing personal information) and expensive to create shared sites.

However, the Central Bank of Sri Lanka believes that POCs using KYC sharing tools “will help strengthen the country's financial services”.

The Central Bank of Sri Lanka first announced the plan for December 2019 and requested a joint venture between local banks and IT companies. Then, with the support of 40 companies (including 17 foreign companies), 3 companies were finally selected to participate in the development of the POC. The entire POC improvement process is expected to be completed within the next six to nine months.

In a similar development in 2016, R3 and associations of 10 banks created POC for KYC joint ventures. The main banks participating in the POC are BBVA, ING, Northern Trust, Société Générale and UBS.