Anyone working in the financial services industry knows about all the new “Know Your Customer” or “Know Your Client” regulations that have popped up in recent years. KYC is essentially the main tool regulators are using to enforce Anti Money Laundering legislation. The term essentially consists of two items:
The first point is important not only for the obvious reasons, but also to help enforce the second point. If the first item did not exist, you could have someone opening 100 different accounts with false names and move the money that way.
As this is primarily a “tech blog”, geeks might rightfully ask what has this got to do with us? Short answer if you dont work in the financial services industry nothing. If you do, you might be involved in the technological solution to a policy generated by management and you must understand the issues involved.
Panama has had a bad reputation as a centre for money laundering in the past. While this used to be true due to the traditionally very liberal banking regulations of past, we now have some of the most stringent anti money laundering rules around. This was started 5 years ago by the introduction of the new Banking Superintendent.
They have introduced very strong regulations on such things as anti money laundering while letting the market take care of most of the other banking infrastructure. In addition to them there is also a special Financial Analysis Unit (UAF) which supervises the Anti Money laundering regulations for all institutions financial or otherwise. UAF have very strong powers and reports directly to the president. This approach has been very successful, know all the international organisations fighting money laundering have given Panama very high ratings.
Now Panama has got a strong tradition for international commerce and communications. We have the canal after all and probably some of the best fiber connectivity in the world. This coupled with our large Banking Center should be a great oportunity to international financial services on the internet. However the main thing stopping this is the implementations of the current anti money laundering regulations. There is not a problem with the regulation it self or with the policy for large and non internet based accounts. However the problem is that there hasn’t been put enough thought by the financial institutions them selves in creating different rules for small internet based accounts.
Most of the rules are setup be relatively unintrusive for traditional non electronic clients. In particular larger businesses doing business through attorneys dont normally have a problem. However how other types of applications, such as payment systems, micro investing, rechargable debit cards etc. They have been made close to impossible due to the interpretations of the laws. The main reason is that they take away the benefits of doing it on the internet. You can’t open account instantly, because you have to provide physical evidence of various items.
However there are many other interesting approaches that can be done using technology, that are fully allowed within the guidelines of the Banking Superintendent.
One approach that I favor is what I call the KYC Ladder. Variations of this are already in place in many internet based financial services today. This takes the graduated approach. An institution defines different levels of access based on different levels of information. This allows smaller accounts/transactions to be done without requiring masses of paperwork. An example could be a rechargable or single use debit card. This could be created with a max balance limit of $200 with no more documentation than customer provided name/address information as well as email verification and a credit card charge. If you want to increase your balance limit you would have to provide further information. This whole thing could be done in such a way that it would be very inobtrusive and quick to open an account and certify oneselves up to higher levels.
FinExtra has an interesting little story about how SMS based Mobile Banking is being rolled out in Colombia, Ecuador and Venezuela:
Florida-based e-financial services utility TODO1 has selected application vendor Network365’s SMS platform mzone agora to deliver mobile banking services to financial institutions in Latin America.
TODO1 currently provides services for Colombian banks Bancolombia and Conavi, Venezuela-based Banco Mercantil and Banco del Pichincha in Ecuador.
The firm’s m-banking solution runs on Network365’s messaging service and delivery platform, mzone agora, which enables mobile operators, banks and other firms to build, launch and manage applications over SMS, MMS, e-mail and Wap Push.
The system will provide subscribers with banking services over mobile handsets, including fund transfers between accounts, payments to third parties, balance inquiries, daily account notifications, security alerts and cheque book requests. [FinExtra]
This is quite interisting. I know it’s not all the most advanced mobile technologies, but this should work on most current networks in Latin America. It will also provide some cool applications once the GSM/1xRTT type networks get a bit more wide spread in use.
I’m not aware of anyone providing these services in Panama as of yet, however we do have GSM/GPRS as well as CDMA 1xRTT networks here as well as 100+ banks so there would be a market.
I saw this at Kenneth Hunt Tech Observer
It is the eNormicom Image Bucket Program:
It takes a lot to differentiate your brand in today’s “me too” world of electronic business solutions. At eNormicom, we create and develop campaigns that break through the chatter clearly and consistently.
And how I laughed. Anyone who’s worked in one pre crash dot com companies will recognise all of this. For me in particular it brings memories from AltaVista . Shots across cubicle walls in the marketing departments, “We need collateral for the firewall product!”
Free, Libre, OpenSource in the Caribbean is the name of a new Conference starting in Trinidad & Tobago in June.
The Caribbean Centre for Monetary Studies (CCMS) and the Trinidad and Tobago Linux Users Group (TTLUG) would like to inform you of the first ever local conference on Free, Libré and Open Source (FLOS) Software. The Conference is scheduled for the 25th and 26th of June 2003 at the Auditorium of the Central Bank of Trinidad and Tobago.
On behalf of the Organizing Committee, we formally invite you and your colleagues to participate in this groundbreaking event. The Conference promises to be a revolutionary influence upon the decision making process used by businesses in Trinidad and Tobago and the wider Caribbean.
I’m going to try to go. Depends on work, money etc. Dominic is this a good enough reason to pop home for a quick visit?
This was just the first night and it will be much bigger later on. However I got a good taste last night.
I saw Samy & Sandra Sandoval perform last night. They are probably the biggest stars in Panama. They are brother and sisters and they perform Musica Tipica. The best way to describe their music to foreigners is Louisiana Zydecco mixed with Salsa and Merengue. Sandra’s voice is outstanding and is completely psychedelic. Panamanians always laugh when I suggest doing a Trance remix of their music. Anyway they are absolutely excellent live and the entire carnaval was dancing and signing along to all the songs.
Via España was lined with beer tents. At 50 cents a beer it was excellent. Everyone was talking to and joking with everyone. I didnt get soaked yet, but got my first ritual dousing with konfetti. We all had a great time.