Introducing the Methods of Remote Identification for E-wallets

In connection with the current Covid-19 pandemic, on April 2, 2020, the Financial Action Task Force (FATF) published a statement aimed at supporting the proper implementation of risk-based approaches. This statement indicates that the activities against legalization (laundering) of criminal income and financing of terrorism shall not become a barrier for distribution of cash funds between those with highest needs.

In connection with this, and considering the complicated epidemiological situation and measures taken at global level, financial sector regulators actively started the introduction of procedures using remote service channels, starting from client onboarding up to performance of payment transactions. Transition to remote provision of services will not only stimulate the development of cashless payments, but also promote mitigation of risks relate to transmission of infectious diseases including COVID-19.

Tajikistan was no exception, and with the purpose of implementing the Decree of the President of the Republic of Tajikistan “On Prevention of Impacts of COVID-19 Infection on Socio-Economic Sectors of the Republic of Tajikistan”, No. 1544, dated June 5, 2020, the Financial Monitoring Department under the National Bank of Tajikistan with active support of the International Finance Corporation’s (IFC) Electronic Digital Financial Services Project have developed procedures for remote identification of clients for the low-risk products, in particular for transfer of electronic monetary funds.

These procedures will allow the financial consumers that have electronic devices with internet connection and built-in camera carry out digital registration and open e-wallet with financial credit institutions of the country. Furthermore, it will enable to make payments for products and services, transferring electronic funds between physical persons (P2P) etc.

It should be noted that approval of this regulation, in addition to its contribution to development of financial technologies will also be the response measure to the COVID-19 pandemic since absence of need for personal presence to perform low-risk transactions will enable consumers to comply with the social distancing requirements.

Consumers will be empowered to select financial institutions that provide high quality services regardless of the residence and accessibility of physical offices.

In addition, provision of low-risk products and services with no need of personal presence will allow banks to minimize costs and allocate more resources to the areas of higher risks.

The new regulation will directly increase the competition between credit institutions and incentivize them to invest in their technological solutions and platforms. This is the first step in the process of extending the financial inclusion of population.

Further, it is planned to carry out necessary activities with regard to remote due diligence of clients for opening of accounts and low-risk transactions.

In order to ensure the sufficient protection measures, the Financial Monitoring Department under the National Bank of Tajikistan conducted the assessment of risks that will be updated regularly in future. Additional measures to mitigate risks related to legalization (laundering) of criminal income and financing of terrorism have been included to regulation based on the outcomes of this assessment.

It is necessary to point out that the new regulation complies with risk-based approach as established by the FATF.

As a next step, it is envisaged to conduct series of joint webinars with the IFC for credit institutions with the purpose of providing detailed guidelines and directives aimed at appropriate risk assessment, FATF Requirements and specific features of remote onboarding of clients.

Financial Monitoring Department