IDG’s USAID FSTA Helps Moldova Achieve Financial Breakthrough with Enactment of e-KYC Amendments

In a landmark development for preventing and combatting money laundering and terrorist financing (AML/CFT), the Parliament of the Republic of Moldova has given its final approval to legislative amendments. These amendments enable financial institutions to conduct all transactions with their clients online, marking a significant step forward in the digitization of the financial sector.

The recently enacted amendments, which drew on recommendations from the MONEYVAL Committee and the EU’s 5th AML Directive, were developed with the crucial support of the U.S. Agency for International Development (USAID) Moldova Financial Sector Transparency Activity (FSTA). These changes pave the way for the widespread implementation of remote customer identification methods, including qualified electronic signatures and photo/video identification, in accordance with the latest electronic means.

Presently, the regulatory framework falls short in allowing financial entities the flexibility to utilize customer identification procedures through “non-face-to-face” methods. This deficiency creates obstacles, particularly for Moldovan citizens residing abroad, when initiating business relationships or conducting transactions that necessitate physical customer identification. Enhancing the regulatory framework for remote customer identification, commonly known as eKYC (Electronic Know Your Customer), particularly at the primary legislation level, would facilitate the digitization process and enable online transactions with customers. This advancement would save customers valuable time and resources while streamlining their interactions with financial institutions.

“E-KYC, or electronic-Know Your Customer, enables an efficient way to check a customer’s identity by digital means, which facilitates their access to financial services. However, as for any new technology, there are potential risks and concerns that should be addressed. This is the reason for which, it is essential that e-KYC is effectively regulated in order to ensure the safe use of financial services and products,” pointed out the First Deputy Governor in charge of the AML/CFT sector, Vladimir Munteanu.

In addition to enabling online transactions between financial institutions and their clients, the recently approved package of amendments by the Parliament of the Republic of Moldova also includes new provisions related to customers’ due diligence, source-of-wealth determination, and transaction record-keeping measures. Another key provision pertains to applying enhanced due diligence measures for residents of jurisdictions being monitored by relevant international organizations.

The new provisions will enter into force on July 1, 2023. In the meantime, the supervisory authorities will have six months at their disposal (from the date of publication of the law) to adjust their subordinate normative acts and draft new ones to implement the newly adopted amendments.

The National Bank of Moldova is currently spearheading several initiatives in the realm of preventing and combatting money laundering and terrorist financing (AML/CFT). With the support of the USAID FSTA Project, the bank is implementing cutting-edge IT solutions that enable the monitoring of money laundering risks and supervision of bank shareholders. Additionally, NBM has organized several thematic training sessions for its employees and reporting entities, with further assistance from the USAID FSTA Project.

According to the legislation, the NBM is responsible for supervising compliance with AML/CFT requirements by banks, payment service providers, and currency exchange offices. As of July 1, 2023, NBM will supervise the insurance and microfinance sectors.