In October 2019, Hungary removed important restrictions on the so-called non-real-time customer due diligence (KYC) conducted by service providers such as credit institutions and financial institutions.
The non-real-time KYC is one of the remote and electronic methods of KYC recognised by the Hungarian regulator. It is often used by fintech companies and by some of the traditional banks as well. In a non-real-time KYC, the customer provides photographs of their face ("selfies") and their identity document. The customer sends these photographs to the service provider via an audited channel of electronic communication and the service provider then uses them to conduct the KYC. The service provider informs the customer about the result of the KYC within two banking days.
Up until October 2019, non-real-time KYC could not be applied in a number of cases, such as for (a) cash transactions, except cash withdrawals not exceeding HUF 300,000 (EUR 900) per month, (b) transfers to or from any party or service provider domiciled outside the EU, or (c) transactions of HUF 10m (EUR 30,000) or more. For these transactions, face-to-face or real-time electronic KYC was required.
Under the amended regulation, the above restrictions do not apply if the service provider complies with a set of extra requirements in the KYC process. These requirements include that the service provider uses an identification scheme of substantial or high level for the communication with the customer, identifies the customer using an online authentication service operated by the government and verifies the customer's identity document via a government database.
This development is likely to result in wider access to purely online banking and other fintech services.
Author: Marton Gervai