UAE launches digital KYC platform to boost financial transparency

A newly established entity will be responsible for developing and managing the platform, with full legal authority to oversee its operations

The Central Bank of the UAE will oversee and regulate the operations of the company managing the KYC platform. Photo: Central Bank of UAE

The UAE government has unveiled a “Know Your Customer” digital platform aimed at boosting banking sector and enhancing financial transparency, streamlining identity verification, and combating financial crime.

The platform, launched under Federal Decree-Law No 30 of 2024, is a significant milestone in the Emirates’ drive to modernise its financial infrastructure and bolster its position as a global financial technology leader.

Designed to provide accurate and confidential customer data, the KYC platform ensures compliance with financial regulations while fostering trust within the UAE's business and financial systems.

By integrating latest digital solutions tailored to the financial, banking, and insurance sectors, the platform enhances the global competitiveness of the UAE’s banking industry.

It will also ensure the legal and regulated collection and use of customer data, streamlining information exchange between relevant authorities and bolstering co-operation in combating financial crime, the UAE government media office said in a statement on Friday.

New entity to oversee KYC platform

A newly established entity will develop and oversee the platform, possessing the legal authority to conduct its operations.

The new company will be responsible for various tasks, including managing the collection, storage, analysis, categorisation, use, exchange, and sharing of KYC data in accordance with national cyber security policies and standards.

It will also generate KYC reports in accordance with the executive guidelines of the Decree-Law and work closely with data providers to optimise the acquisition and management of KYC data.

“The Decree-Law establishes a strict legal framework for safeguarding customer data, permitting disclosure only under specific conditions,” the statement said.

“All involved parties are obligated to protect this data from loss, damage, and unauthorised access, requiring prior customer or legal entity approval for any data use or sharing,” it added.

Customers will also have the right to access their KYC report details.

The Central Bank of the UAE will oversee and regulate the operations of the company managing the KYC platform. It will establish the regulations governing the company’s operations and service offerings, along with a code of conduct for both data providers and users.

Additionally, the regulator will outline standards for systems used to store, process, and protect data, as well as define the specific customer information the company can request from data providers.

Strict penalties for breaching KYC data confidentiality

Violating KYC data confidentiality regulations will incur strict penalties, including a minimum prison sentence of two years and fines starting at Dh50,000 ($13612).

These sanctions apply to unauthorised disclosure of customer information or attempts to access KYC reports through fraudulent means or illegal methods.

Additionally, any misuse of customer data by public officials or employees of the platform's management company will be treated as an aggravating offence, resulting in harsher consequences.

UAE’s robust banking sector

UAE’s banking sector has remained resilient driving the nation’s economic growth and stability. Total capital and reserves of banks operating in the Emirates crossed Dh500 billion for the first time in July. They jumped 10.5 per cent annually to Dh502.6 billion, state news agency Wam reported earlier this month citing the UAE’s Central Bank data.

National banks accounted for more than 86 per cent of the total capital and reserves, reaching Dh433.7 billion, up 10.4 per cent.

While foreign banks added nearly 13.7 per cent to the total capital and reserves, reaching Dh68.9 billion in July, an increase of 11.1 per cent on a yearly basis.

The UAE has been focused on diversifying its economy from oil, with non-oil sector growth picking up significantly in recent quarters.

Its economy is expected to grow 4 per cent this year, up from the previous estimate of 3.9 per cent in June, the latest report by the UAE Central Bank showed.