Bank of Italy: the era of automated remote onboarding begins

Since last October, banks and brokerage firms have had the opportunity to design their own remote onboarding processes independently. With the Provision of June 13, 2023, the Bank of Italy abolished its regulations on video identification, opening the possibility of verifying the identity of new clients through remote, unassisted, or fully automated identification.

Banks: New Guidelines for Remote Onboarding

With the abolition of Annex 3 of the provisions on Adequate Verification issued on July 30, 2019, the Bank of Italy takes a first step toward aligning with the European Banking Authority (EBA) guidelines on supervision of remote customer onboarding solutions.

One of the most significant updates concerns the methods of remote identification: with the publication of the guidelines in November 2022, which apply from October 2, 2023, the EBA officially allows fully automated procedures.

According to the new EBA guidelines, obliged entities can design their remote onboarding processes autonomously, provided they ensure:

• Documented assessment of risk factors and the adequacy of the solutions adopted;
• Ongoing training of staff on remote onboarding and related risks;
• Continuous monitoring of the correct implementation of the system, which must be periodically reviewed and modified when necessary;
• The integration of the solution into the broader internal control system of the institution.

As specified in the document, the continuous monitoring of the remote onboarding system "also applies when fully automated remote onboarding solutions are used, which largely rely on automated algorithms, with limited or no human intervention."

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Outsourcing KYC: A New Opportunity
Another important development concerns the outsourcing of the KYC (Know Your Customer) process, which requires all financial institutions to identify and verify the identity of each customer: today, banks and financial institutions can outsource the process by leveraging the expertise of specialized companies.

Outsourcing can be managed independently, as long as the necessary measures are taken to ensure that the third-party processes and procedures for adequate customer verification for remote onboarding, as well as the information and data collected in this context, are sufficient and consistent with the requirements established in the guidelines.

Aside from the guidance in the guidelines, the KYC process can be entrusted to relatively new solutions and technologies for the banking sector, starting with APIs: an opportunity that promises to optimize costs and resources without compromising the security required by banking supervision activities.

Video Identification API Compliant with EBA Guidelines

The Openapi Video Identification API allows for fast and efficient remote identity verification, ensuring a level of security that aligns with EBA guidelines.

All video recognition methods involve the automatic verification of documents through CRIMNET and the execution of the steps defined by the Bank of Italy in its Adequate Customer Verification provision to combat money laundering and terrorist financing.

You can choose from different types of video identification via API, either with an operator or fully automated:

• Automated Video Identification: allows the new client to complete the video recognition process independently. The user must upload their documents, take a photo, and create a short video; the material must pass OCR system checks and is subject to human verification.
• Selfie Video Identification: the user performs the same steps, but the verification of the materials entered into the system is done by back-office operators asynchronously.
• Live Video Identification with Operator: the entire procedure is conducted live with a human operator who verifies the user's identity. The live identification service is available Monday to Saturday, from 9:00 AM to 6:00 PM.

As stated in the EBA guidelines, when choosing a provider for such a crucial service, it is advisable to consider, among other factors, "the technological suitability and data governance of the external service provider." Openapi has obtained ISO 25012:201 for Data Quality and, more recently, ISO 9001:2015 for the creation, implementation, and management of a Quality Management System.