A KPMG report has revealed that Nigerian banks spend billions of naira annually to implement the Know Your Customer , which is a compulsory regulatory tool used to reduce the menace of money laundering, terrorist financing and corruption, especially in managing public finance.
It also noted that the KYC requirement could also be an inhibitor to the attainment of financial inclusion policy in Nigeria that did not have centralised identity management systems. The key drivers of the continual increase in the cost, according to the report, included frequent changes in regulatory requirements, financial inclusion programs, increase in customer base, initial cost of acquiring technology needed to implement KYC, more complex ownership structures of some businesses operating bank accounts and increase in the number of employees required to administer the KYC unit in a bank.
KPMG also highlighted that some of the topmost challenges banks encountered while implementing KYC in Nigeria include identifying complex legal structures, verifying addresses and identities, identifying and verifying politically exposed persons , as well as remediating rather high-volume of legacy accounts.
It acknowledged that the deployment of Biometric Verification Number and the ongoing National Identification Number registration would continue to contribute to addressing this challenge of disparate identity systems in Nigeria that made it difficult for banks to effectively and efficiently identify individuals.
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