Thread by @MsGillyJ

Have you ever wondered why is it that you need to provide so many documents to operate a bank account, to apply for a loan or to do business at most financial institutions in Jamaica?

It may be frustrating, but there's a reason . A thread on KYC #FinanceTwitterJa

As a Jamaican trying to access financial services for the first time, you may wonder for example why you need to show proof of income to open a bank account when you may have never worked before! Overseas the process is usually digital, simple and has little to no paperwork

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It hasn't always been this way in JA so what changed?When I opened an account at a Building Society (many) years ago, all I needed was an ID & possibly proof of address. Now, all financial institutions (FIs) have to abide by ‘Know Your Customer’ (KYC) rules. What's that?
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Banks and other FIs are required to collect pieces of information that are specifically outlined in guidance notes provided by their regulators, the Bank of Jamaica or the Financial Services Commission (FSC).

The requirements are based on the riskiness of the transactions. 4/

Banks would have the most onerous KYC requirements & remittances/cambios may just require an ID &/or Proof of Address.

The table below from my site outlines the entities included in the guidance notes for both regulators, indicating who is required to collect KYC documents.

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The different groups of FIs have varying level of requirements for KYC. According to the BOJ Guidance Notes item 126, banks are required to collect the documents below to satisfy the requirements of Customer Identification.

FIs are also required to update them every 7 years.

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There are exemptions to some of the KYC requirements for persons who reside overseas (i.e. would not have a TRN). The requirements also differ for sole proprietors or business owners.

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So now I know you’re wondering why so many documents are required for transacting business with a bank. The requirements often make it difficult for persons who do not have means to provide these items to become 'banked', but the reason for implementing them is valid..

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..based on Jamaica’s history of persons using their bank account to fund illicit transactions like fraud & scamming. The guidelines come from two key pieces of legislation that govern how institutions need to operate to prevent funds being used for the proceeds of crime 9/

The requirements are designed to identity and limit the use of funds for activities that include (but are not limited to) the following:

money laundering (including lottery scamming), organized crime, drug trafficking or other criminal activities. 10/

Some non-financial institutions & individuals are required to report (at some level) as well. Lawyers, Accountants, Real Estate Dealers, Gaming Machine Operators and Casino Operators also have to alert the authorities of certain types of transactions. 11/

So when you are asked to fill out these forms and provide proof of who you are, it is not just because the FIs want to frustrate you, but as your granny would say, this is an unfortunate and classic case of “the good have to suffer for the bad.”

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I am hopeful that in the future, with the improvements in technology & innovation spurred through a central identification source (NIDS) that these requirements will be reduced or disappear altogether. Until then, FIs have to ensure they are KYC compliant to avoid sanctions. 13/

How do you think Jamaica can solve this problem? I welcome your feedback!

#FinanceTwitterJa

Visit my article on this here financialcentsibility.com/kyc/