Deloitte develops Blockchain proof-of-concept to mutualize KYC checks

Luxembourg - 9 May 2017

Deloitte Luxembourg has developed KYCstart (pronounced “Kick Start”), a new proof-of-concept to perform customer on-boarding using Distributed Ledger Technology. The model introduces extensible Digital Identities and the forward-looking concept of regulated KYC Added-Value Service Providers, with the objective to onboard customers once to be used across several different platforms and organizations.

In this model, KYC Added-Value Services Providers are regulated entities that are authorized to perform Know-Your-Customer (KYC) procedures for communities of users who want to enter in business relationships with various businesses such as banks, insurance companies, funds, asset servicers, and administrations.

Customers directly control to whom they share their personal information and documents, keeping track of these authorizations in the distributed ledger using smart contracts.

Deloitte Luxembourg has extended the core KYC platform developed by Deloitte’s EMEA Blockchain Lab to demonstrate a comprehensive ecosystem for fund investors based on a DLT platform, which puts new regulated entities in the picture. This PoC demonstrates the power of the Deloitte Labs to build technological and functional bricks that can be reused by other member firms globally to showcase disruptive business and operating models.

The way it works

Thibault Chollet, Blockchain Leader at Deloitte Luxembourg explains: “With this proof of concept and related eco-system, we demonstrate the benefits of using Blockchain and smart contract to considerably reduce the costs of one of the most important burden of our institutional clients: KYC and customer on-boarding.”

While these procedures can already been externalized, they still must be performed each time a customer is willing to enter in a new business relationship with an institution. At the level of a market or an industry, it means that the same checks are repeated several times for the same customer. The responsibility of performing those checks still currently remain at the level of the institution that is required by law to oversee.

“Providers can now rely on specialized entities to delegate and mutualize the KYC and AML/CTF procedures, reducing the cost of both onboarding and ongoing monitoring,” continues Maxime Heckel, Director at Deloitte Luxembourg specializing in KYC services.

He adds that Deloitte will start providing “KYC as-a-Service” to financial institutions as of mid-2017. KYCstart will be one of the proposed counterparty on-boarding channels for the service.

Deloitte Luxembourg will present this proof-of-concept at ICT Spring on 9-10 May.

Smart technology

Blockchain technology relies on a digital and distributed ledger which operates in a transparent environment without the need for a trusted authority to validate information. Transactions are validated by miners — specific nodes in the blockchain network - who use a programmed consensus to verify, authorize, validate, and record transactions. Blockchain technology can also leverage so-called “Smart Contracts,” in which terms are implemented in a computer language and can execute themselves when specific conditions are met.

Deloitte is a multidisciplinary service organization that is subject to certain regulatory and professional restrictions on the types of services we can provide to our clients, particularly where an audit relationship exists, as independence issues and other conflicts of interest may arise. Any services we commit to deliver to you will comply fully with applicable restrictions.

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.

Deloitte provides audit, consulting, financial advisory, risk advisory, tax and related services to public and private clients spanning multiple industries. Deloitte serves four out of five Fortune Global 500® companies through a globally connected network of member firms in more than 150 countries and territories bringing world-class capabilities, insights, and high-quality service to address clients’ most complex business challenges. To learn more about how Deloitte’s approximately 245,000 professionals make an impact that matters, please connect with us on Facebook, LinkedIn, or Twitter.

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