The government of the United Arab Emirates (UAE) has recently announced and launched the “Know Your Customer” (KYC) platform. It aims to make financial transactions safe and transparent, increasing the trust of businesses and transactions in the country. It aims to accelerate the digital platform and create a strong legal framework for verifying customer identity. Today, in this article, we will examine the details of the KYC platform, its advantages and disadvantages, and its impact on various stakeholders.
What is Know Your Customer (KYC) in UAE? Fully Explained
“Know Your Customer” (KYC) was established under Federal Decree-Law No. 30 of 2024, and launched to transform the UAE’s financial system into a safe, transparent, and modern one. If we put it in simple words, the main purpose of KYC is to prevent financial crimes in the country and to verify the identity of the customer accurately. This will increase transparency in business, reduce crimes, and fraud, and also make it easier for banks to lend money.
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This wrap-up form will store the financial information and personal information of every person with an Emirates ID and a bank account in the country in a secure system. With the help of this modern system, banks, insurance companies, and other financial institutions will be able to check any customer whether this person is eligible to lend money, or get insurance or not.
Benefits of KYC (Know Your Customer) in the UAE:
This platform, presented by the UAE government, has many features that will make it play a positive role in the country’s economy.
- Fraud Prevention: The platform helps prevent financial crimes, such as fraud and money laundering.
- Consumer Security: Customer accounts and data are kept safe by verifying customer identity.
- Financial System Strength: KYC creates transparency and trust in financial institutions, which makes the system stronger.
- Easy Access to Digital Services: Through KYC, people can easily access digital banking and other financial services.
- Legal and Regulatory Compliance: The platform helps in following laws and avoids penalties.
- Investor Confidence: Investors are confident that financial institutions are operating within a transparent and legal framework. This improves the economy of the country.
- Boosting the Digital Economy: KYC promotes digital transactions and e-commerce, which in turn boosts the economy.
Is user data secure with this platform?
The government says that all users’ data is completely protected under this digital platform. It will not be shared with anyone and will be disclosed only under legal conditions. All users have the right to get information about their data. Under this law, anyone who shares the user’s data illegally will face strict action.
It has been decided to impose strict penalties for unauthorized use of user data from this platform. Under this, the person who does so can be imprisoned for a minimum of two years and fined AED 50,000. The responsibility for this data has been given to the Central Bank of the United Arab Emirates. It will regulate the platform’s operations and set data protection standards.
A new administrative body: “Digital Security Authority”
According to the law, a new company will be established for this platform. Its task will be solely responsible for the development and management of the KYC platform. This company will perform the following tasks:
- Collecting, storing, and analyzing data.
- Issuing KYC reports.
- Promoting collaboration with data providers.
- Ensuring data security following national cybersecurity policies.
Benefits of KYC platform to Businessmen and Shopkeepers
The benefits of the “Know Your Customer” (KYC) platform are not limited to financial institutions or banks. Through it, ordinary shopkeepers and businessmen also get many benefits. Here we have given some of the important benefits that shopkeepers and businessmen can get from this platform:
- The main purpose of the KYC platform is that vendors will be able to verify the legal identity of their customers. By doing so, they can avoid any illegal or suspicious activity.
- It helps any business person prevent fraud or money laundering attempts in their business.
- Verifying identity increases trust between customers and vendors, thus facilitating the ease of doing business.
- Vendors can expedite transactions, loans, or other payments.
Just as it offers many benefits, it also has some disadvantages. KYC will require the user to provide their identity card, address, and other information, which can affect their privacy. Apart from this, if the data is leaked due to any accident or any other reason, it can prove to be very dangerous for the user.
However according to the law, this data is in safe hands and will not be used for any illegal purpose. Overall, the KYC platform is an important step towards the development and stability of the UAE’s financial system and it also benefits the country globally.
The UAE government is making many changes to its system, such as the recent introduction of the UAE 2024 Emiratisation Targets, which made it mandatory for companies with more than 20 employees to employ a UAE resident.
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