As the financial industry continues to evolve, staying compliant with regulations is more critical than ever. At FiveComply, we specialize in providing comprehensive compliance support tailored to your business needs. On the 6th of August 2024, the Cyprus Securities and Exchange Commission (CySEC) issued a significant Policy Statement (PS-01-2024) aimed at enhancing the onboarding process for non-face-to-face (NFTF) customers. This new regulation highlights the importance of using innovative electronic methods to ensure robust customer due diligence (CDD).
Understanding the CySEC Policy Statement:
The newly issued Policy Statement by CySEC addresses the challenges and opportunities associated with remote customer onboarding. The policy, which takes into account the European Banking Authority (EBA) Guidelines and other regulatory frameworks, emphasizes the need for a risk-sensitive approach when adopting Remote Customer Onboarding Solutions (RCOS).
Key aspects of the policy include:
- Technology-Neutral Approach: CySEC supports a technology-neutral approach, encouraging Obliged Entities (OEs) to incorporate RCOS without bias toward specific technologies. This allows businesses to choose the most suitable solutions that align with their compliance strategies.
- Comprehensive Risk Assessment: Prior to implementing RCOS, entities are required to conduct a thorough risk assessment. This assessment ensures that the chosen solutions effectively mitigate risks associated with money laundering and terrorist financing.
- Regulatory Notification: Entities must notify CySEC of their intent to integrate RCOS into their NFTF onboarding processes. This notification, along with a standardized attestation from responsible persons, demonstrates a commitment to regulatory compliances.
- Limitations on Transactions: A risk-based approach necessitates setting explicit limits on assets and transaction sizes during remote onboarding. This helps in maintaining control over potential risks and ensuring that due diligence measures are adequately applied.
- Identity Verification Procedures: The policy outlines stringent requirements for electronic NFTF identification, including the use of dynamic selfies or video calls. All verification must occur through a single device to enhance security and authenticity.
- Revised electronic NFTF Customer Identification procedure: CySEC emphasizes the need for accuracy and authenticity in verifying identification documents and specifies that entities should use official sources, highlighting PRADO as a trusted and reliable database. The use of PRADO is recommended because it provides a centralized repository of authentic identity documents recognized across Europe, ensuring that investment firms can verify documents vetted and considered valid by regulatory authorities.
The Importance of Compliance in Digital Onboarding:
The shift towards digital onboarding brings both convenience and challenges. While innovative technologies offer seamless customer experiences, they also necessitate a heightened focus on compliance to prevent financial crimes. The CySEC guidelines serve as a crucial framework to guide entities in integrating effective remote onboarding solutions that adhere to regulatory standards.
How FiveComply Can Help:
At FiveComply, we offer specialized compliance support services to help your business navigate the complexities of the CySEC policy and other regulatory requirements. Our team of experienced consultants provides tailored solutions to ensure your onboarding processes are compliant, efficient, and secure.
Navigating the complexities of compliance in the digital age can be challenging. However, with the right guidance and support, your business can stay ahead of regulatory requirements and maintain a competitive edge. FiveComply is here to assist you every step of the way, ensuring that your compliance processes are both effective and efficient.