By Thekla Nikolaou
Manager, Compliance Support Department
In today’s rapidly evolving digital landscape, the way regulated entities interact with and onboard clients is undergoing significant transformation. The latest Policy Statement (PS-01-2024) issued by the Cyprus Securities and Exchange Commission (CySEC) is a perfect example of this revolution. This policy fundamentally changes how regulated entities can onboard clients by adopting Remote Customer Onboarding Solutions (RCOS).
Let’s explore the key points introduced by this policy and how regulated entities can benefit.
1. Flexibility with Technology-Neutral RCOS
A major change introduced by this policy is the adoption of technology-neutral solutions. Until now, video calls were the sole option for RCOS in non-face-to-face (NFTF) client onboarding. Starting December 1, 2024, firms will be free to choose any RCOS that suits their needs, whether it’s biometric verification, dynamic selfies, e-signatures, EIDAS-compliant solutions, or any other digital solution. This flexibility allows firms to tailor their onboarding process according to the latest technological advancements while remaining compliant with the regulatory framework.
2. Risk Assessment First, CySEC Notification to Follow
While the policy allows more freedom in choosing RCOS, CySEC still emphasises the necessity of a thorough risk assessment before implementation. Firms are required to conduct a detailed evaluation of the risks involved in using RCOS, especially concerning money laundering and terrorist financing (AML/CFT) threats.
Regulated entities must notify CySEC before they begin using RCOS in their NFTF onboarding processes. This notification is informational and does not constitute regulatory approval of the RCOS.
3. Enhanced Security with Liveness Detection and Biometric Solutions
Although CySEC has relaxed some restrictions, it has reinforced its focus on security, especially for unattended RCOS (those where clients do not interact directly with an employee). In such cases, liveness detection is mandatory. This ensures that the system can verify a person’s physical presence during the onboarding process, reducing the risk of impersonation fraud. Firms have the flexibility to implement this through various technologies, such as facial recognition, biometric scanning, or other advanced solutions.
4. KYC Updates
Another change brought by the new policy is that the type of identification documents accepted for NFTF clients is no longer limited to passports. Regulated entities can now use any official identification document issued by a government, provided that it includes the individual’s full name, date of birth, and a photograph – such as a driving licence. This change allows for greater flexibility in identification procedures.
Additionally, the policy now allows regulated entities to confirm a client’s address when collecting copies of original documents through RCOS, further streamlining the KYC process.
Why This Matters for Regulated Entities
CySEC’s new policy is a game-changer for the regulated entities. By embracing flexible, technology-neutral solutions, firms can offer a smoother and more secure onboarding experience. As financial regulations become more demanding, it’s crucial for firms to stay ahead of the curve, ensuring both compliance and operational efficiency.
Regulated entities are advised to review the policy statement and ensure that their NFTF customer onboarding processes comply with the outlined requirements. The policy’s annexes provide additional practical guidance, including amendments to the CySEC AML Directive, a notification form for RCOS usage, and updated procedural requirements.
Ready to Transform Your Onboarding Process?
Contact us today to find out how we can help your firm make the most of these new opportunities.
At MAP S.Platis, we specialise in guiding regulated entities through regulatory changes like CySEC’s Policy Statement on digital onboarding. Whether you’re adopting new technologies or enhancing your AML/CFT compliance framework, we provide tailored solutions that align with the latest regulatory standards.
Partnering with the right consultancy can make all the difference in navigating these new regulations and integrating effective RCOS into your business operations. Our expertise in financial compliance can help you implement solutions that not only meet CySEC’s requirements but also improve your client engagement and onboarding processes.
For more information on how the AML reforms will impact your operations and for assistance in preparing for these changes, please contact us. Our expert team is well-positioned to support you with:
- Consulting and support on AML/CTF-related matters.
- Risk assessments.
- Evaluation and due diligence of RCOS vendors.
- Preparation of GAP Analysis reports to ensure compliance with the AML regulatory framework.
- Delivery of training to key compliance personnel in managing financial crime risk.
- Monitoring and assessment of the correct and effective implementation of your practices, measures, procedures, and controls, as well as drafting relevant policies tailored to your organisation’s needs.
- Review and assessment of your organisation’s client identification, due diligence procedures, and information obtained from clients.
- Ad-hoc AML/CTF health-check reports.Bottom of Form
