ID verification loosened

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ID verification loosened

Starting in December, people will be able to apply for new bank accounts without having to show up at a brick-and-mortar branch, the nation’s top financial regulator said Monday.

Korea’s landmark real-name financial transaction law strictly requires physical confirmation of personal identities when opening new accounts to crack down on accounts being opened under fake names. The eased regulation will be applied to all commercial banks from December and other financial institutions from next March.

But insurance companies and credit card companies will not be subject to the new rule. Some of them are already allowing remote subscriptions.

It is the government’s first relaxing of the real-name transaction law in 22 years. Under current laws, customers must visit bank branches to open a new account with their identity cards.

They will need to pick two out of four methods of non-face-to-face identification verification suggested by the Financial Services Commission (FSC): sending a copy of an identity card, video call, mail delivery of an account-linked debit card and double-checking with information on existing accounts. Financial institutions can choose any of the four methods and require their customers to use at least two of them.

The strict face-to-face regulation has been the biggest obstacle to attracting customers to online-based businesses.

“It is a significant change,” said Doh Kyu-sang, director general of the FSC. “In order to help boost cutting-edge IT infrastructure in the financial sector along with the growing demand for fintech services, the government decided to amend its old-fashioned regulations.”

The alteration will help the country introduce a direct banking system operated entirely on the Internet without the need to visit an offline bank. The government plans to announce finalized measures in June.

The regulator will encourage banks to establish new systems that make the indirect identification process possible by August and run trial tests by September.

Financial institutions can come up with their own ideas to check identities of customers via their own certification issuances, I-PIN numbers or smartphones, which are widely used abroad.

The FSC said it will enhance monitoring of dubious financial transactions made through non-face-to-face means and strengthen penalties on false-name accounts.

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