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Identification
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FinTechs belonging to this category provide identification services, which are required for most banking services.
Introduction
Attitude of the country towards identification services
The identification market is an established market. FinTech services in this business area are used by other FinTechs or credit and financial institutions.
Recently, there was a significant change as the legislation now allows usage of so-called bank identity, i.e. an electronic identification means with the assurance level substantial pursuant to eIDAS, for the purposes of AML identification – several Czech banks provide this service through bank-controlled company Bankovní identita a.s.
Legal affairs
Obligations and requirements to provide identification services
Regarding the identification of the customer as the main "Know Your Customer"-element (KYC-element) the Czech money-laundering act (Zákon o opatreních pro legalizaci výnosu z trestné cinnosti a financování terorismu, "AML Act") must be complied with.
According to the Czech AML Act, obliged parties can delegate the fulfillment of the KYC requirements to third parties (under certain further conditions).
The third parties do not need any license under the Czech AML Act to provide their services to the obliged entity. However, in the case of banking identity, the Czech Act on Banks stipulates that a bank that wishes to issue a bank identity that can be used for AML identification needs to obtain authorisation pursuant to the Czech Act on Electronic Identification.
Additional comments regarding the legal situation for identification services or what FinTech’s must be aware of in this business area
There are plans to harmonise the AML/KYC regulation on a European level. This could lead to changes regarding the KYC requirements and the delegation to third parties. Further details have not yet been conclusively clarified.
Economic conditions
Market size for identification services and biggest companies in this business area
Unfortunately, there is no statistical data available regarding the market for identification services in Czechia. Prominent KYC-services providers are Bankovní identita or TRASK SOLUTIONS.
Additional comments regarding the economic situation for identification services or what FinTech’s must be aware of in this business area
There is a rather limited set of options on how to conduct AML identification in compliance with the Czech AML Act (see below). Also, with Bankovní identita providing the identification services built around bank identity (which has many advantages for obliged entities), there is a chance that this way of identification will become dominant in the future.