Estonia relaxes rules on account opening via bank branches

Estonian residents and e-residents will be able to open current accounts without visiting bank branches according to a draft regulation of the Minister of Finance. It will be possible for financial institutions or banks to identify people without being at the same place as the person or their representative. This must be done with IT tools that allow for the process to be recorded and replayed.  Identifying a person with IT tools is equivalent to the identification of a person by being at the same place as them.

“We will make opening a bank account easier and faster for everyone, including e-residents,” said Minister of Finance Sven Sester. “We want to make things more convenient, but also maintain the security necessary in the financial sector. The IT solutions that make it possible to identify people from a distance have existed for some time. Allowing for them to be used when bank accounts are opened certainly makes sense. The draft was prepared in close cooperation with private sector financial institutions and banks, which helped us develop the most contemporary and secure principles.”

“There is no doubt that e-residents will help bring more investments and jobs to Estonia,” added Sester.

The Minister of Finance has presented the draft regulation to other ministries and agencies as well as associations of market participants for consultation.

The purpose of the regulation is to establish specifying standards on the basis of the amendments to the Money Laundering and Terrorist Financing Prevention Act adopted by the Riigikogu in June. According to the amendments, identifying a person with IT tools is equal to identifying them by being at the same place as the person or their representative if certain conditions are met.

The requirements for the identification and verification of people with IT tools, which are set forth in the draft regulation, help implement a common standard for all service providers. When the standards enter into force, it will be possible for financial institutions or banks to identify people without being at the same place as the person or their representative. This must be done with IT tools that allow for the process to be recorded and replayed. The amendments will create a situation on the market where the new identification and verification regime is a preventive measure and keeps potential abusers away.

It will be possible to use a real time video bridge for identification and verification of a person, which makes it possible to compare the image of a person’s face with the data of their identification document and the Police and Border Guard Board. The person will also be interviewed via the video bridge, which will help ascertain the client’s risk profile: assess their background, the origin of their financial resources and the purpose of establishing a business relationship. The entire process is recorded and the recording is preserved.

The earlier regulation required people taking part in a transaction or using a service to be identified by being at the same place as the person or their representative. If all conditions are met, identifying a person with IT tools is equivalent to the identification of a person by being at the same place as them. In the case of monitoring a business relationship, for example, the new and information technological solution is an even stronger measure than being at the same place as the person or their representative.

Banks will of course retain the right to identify a person by being at the same place as them. It will be up to the service provider to decide whether they want to open accounts for clients or conclude transactions with them using information technology tools. The service is meant for everyone who holds an Estonian ID card, digi-ID or e-resident’s card.

Source: www.finextra.com