Corporates Can Open Bank Accounts Using Blockchain in Dubai
In March 2020, the Dubai International Financial Centre (the “DIFC”) in collaboration with the Mashreq Bank has launched the first Blockchain data sharing platform in the Middle East in order to accelerate the process by which banks could comply with the Know Your Customer (“KYC”) requirements when it came to licensed businesses and corporates. The KYC Blockchain platform has been built by norbloc, a member of the DIFC incubator, with its headquarters in Stockholm, Sweden.
The new initiative is one of many under the aegis of the Smart Dubai office, which aims to leverage collaboration between the private sector and the governments in order to facilitate a citywide smart transformation. The government’s vision is to empower, deliver and promote an efficient, seamless, safe and impactful experience for residents, visitors and investors in the region.
The platform enables all corporations and banks based in the UAE to avail the platform and the transfer of authenticated and validated KYC data of companies to be shared instantaneously with the required financial institutions.
The DIFC is now responsible for the generation of the primary KYC record during the application process for corporate licenses. The sharing of the primary record enables companies in the UAE registered on the Blockchain to instantly open bank accounts, as banks no longer have to spend time or resources verifying the identity of the customer.
A consortium of banks including the Dubai Economy, Emirates NBD, Emirates Islamic, HSBC, RAKBANK, Abu Dhabi Commercial Bank and Commercial Bank of Dubai, have already allied in order to boost the adoption of the government’s initiative. Statements from the heads of these banks indicate an overall trend pushing towards increased utilization of Blockchain technology in order to transform traditionally pen and paper processes.
By utilizing Blockchain technology, the DIFC’s initiative enables banks to streamline the process of signing on a new customer. Furthermore, the new portal also promotes data sharing between financial institutions and licensing authorities. As participation on the network increases, the KYC Blockchain is bound to prove the UAE government’s commitment to its Blockchain Strategy 2021 and digital initiatives. norbloc’s participation also shows the promise of current as well as future members of the DIFC’s incubator programs. This is but the first of future developments by the government in this sector, such as the upcoming “Digital Silk Road” as well as the “Bank Trust Network.”
Adv. Shayan Dasgupta
Corporate & Commercial Law | M&A | FinTech, Blockchain & AI