Country _ Name
FinTechs belonging to this category provide identification services, which are required for most banking services.


Attitude of the country towards identification services

It is well established that existing customer due diligence (“CDD”) procedures are tedious, unpleasant, and expensive. Without a doubt, the digitalisation and implementation of an enhanced CDD procedure will be well received.

Legal affairs

Obligations and requirements to provide identification services

Generally, CDD procedures are carried out to address issues with regard to money laundering and terrorism financing. Banks are classified as reporting institutions and are required to comply with anti-money laundering policies issued by the BNM, particularly the Anti-Money Laundering, Countering Financing of Terrorism and Targeted Financial Sanctions for Financial Institutions Policy (“AML/CFT Policy”) which came into force on 1 January 2020.
There is no requirement to obtain a license in Malaysia for purposes of identification services. In principle, reporting institutions are required to conduct its own identification procedure for the on-boarding of customers pursuant to the AML/CFT Policy, which recognises electronic “Know-Your-Customer” processes as the process where CDD is conducted by electronic means, including online and mobile channels.

Additional comments regarding the legal situation for identification services or what FinTech’s must be aware of in this business area

Banks may also outsource the function of identification to a third party (e.g. FinTechs), subject to the Outsourcing Policy Document issued by BNM. In doing so, the banks must in turn carry out a comprehensive assessment of the FinTech to ensure that the FinTech has, among others, the relevant capacity, capability, financial strength, and business reputation to carry out CDD services on behalf of the banks.

Economic conditions

Market size for identification services and biggest companies in this business area

According to the Lexis Nexis® Risk Solutions study, financial institutions in Asian markets are spending approximately US$1.5 billion annually on customer due diligence (“CDD”). Unfortunately, there is insufficient data to indicate who the market leaders are.

Additional comments regarding the economic situation for identification services or what FinTech’s must be aware of in this business area




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