LOQR’s Suggestions and Comments to EBA’s Draft Guidelines on the Use of Remote Customer Onboarding Solutions 

Author LOQR

With the increasing risks of different types of frauds, financial crimes, as well as other criminal activities via digital platforms, LOQR believes that the most advanced technology tools should be leveraged to ensure safe and efficient experiences for both customers and financial institutions.  

After the release of the Draft Guidelines Public Consultation by the European Banking Authority (EBA), LOQR analyzed the proposal and submitted our suggestions and comments for potential improvements.

What does EBA mean? 

European Banking Authority (EBA) is a European Union agency responsible for ensuring regulation and supervision across the banking sector in the EU countries. 

What are the guidelines? 

The Draft Guidelines on the use of Remote Customer Onboarding Solutions are a paper issued by the European Banking Authority to standardize and clarify the procedures about the remote customer onboarding processes, namely related to governance, internal procedures, and due diligence (Know Your Customer – KYC –, Anti-Money Laundering – AML –, and Counter-Terrorist Financing – CTF) foreseen by the article 13 (1) of the Directive (EU) 2015/849 (also known as the 5th AML Directive) in the EU member countries.   

As the National Regulatory Authorities may vary their interpretations about the Directive, the EU Commission asked the EBA to issue those guidelines. The document was open for comments and questions until March 10th, 2022, and LOQR actively participated in the process.  

Why does LOQR consider it essential to discuss the regulation of Remote Onboarding? 

LOQR understands that remote onboarding is a crucial journey for the development and transition of traditional banks into the digital world. Building a proper regulatory basis can be a key factor in establishing a safer and more convenient financial environment, for customers and financial institutions.  

How do the guidelines promote digital financial inclusion?   

By defining common regulatory standards for remote onboarding, the Draft Guidelines can increase the number of financial institutions offering remote onboarding and digital services, benefiting clients with better products and lower fees. Also, this process can facilitate customers’ access to the financial system, especially in locations where banks do not have branches. 

Why did LOQR participate in the public consultation? 

LOQR provides Journeys-as-a-Service (JaaS) for financial institutions, having clients in Portugal, Spain, and Norway. Tech and compliance are both in our DNA.  

Our presence in these highly regulated markets gave us the expertise of meeting all the applicable regulations while providing a seamless customer-centric experience. The Portuguese market, for example, has been meeting most of the proposed EBA’s guidelines through regulations of the Portuguese Central Bank. With successful solutions already implemented in those markets since 2017, LOQR considers some standards and technical aspects that should be included in the guidelines.  

We understand that digital financial inclusion is crucial for European societies. However, it should walk hand in hand with security aspects (both IT and Identity checks) to protect the financial system and the clients.  

In this sense, technology combined with security procedures can mitigate risk, and ensure a quality, democratic and safe business relationship between institutions and their clients. Suggesting the implementation of these procedures and technologies was the main purpose of the comments LOQR has submitted.  

What were LOQR’s suggestions? 

Our comments were mainly related to the adoption of state-of-the-art technologies and procedures, such as liveness detection and face match in a wider range of cases; safety features of the documents used for remote onboarding; requirements for the connection established between the client’s device and the servers of the institution; procedures for addressing problems regarding the connection; and requirements for One-Time Password (OTP). 

The full text with our comments, suggestions, and reasoning is available here.

To know more about LOQR’s solutions, contact us.