UAE banks given go-ahead to use UAE Pass to validate clients’ identities

In an official circular, the Central Bank said it welcomed the ‘UAE Pass’ initiative and was allowing banks and other financial firms to use the app to check customers’ identities when they were opening bank accounts or conducting transactions as individuals or representatives of corporates.

Banks will still be able to carry out KYC procedures in other ways and the use of the UAE Pass is optional, but it is likely to mean that clients will no longer have to supply a hard copy of their Emirates identification card.

Banking law expert Marie Chowdhry of Pinsent Masons, the law firm behind Out-Law, said: "While the transition of UAE Pass into the banking sector is a step in the right direction in terms of opening up private sector access to a national digital identity and in turn, a digital signature solution for residents living in the UAE, the country’s banking sector still lags behind other jurisdictions with regards to operating in a purely digital space."

"Unlike across Europe and the US, bank account opening in the UAE remains reliant on customers providing original documents, with limited solutions at the front-end market for those customers who want a purely online service," she said. "For example, ADCB’s ‘uBank’ proposition which has been marketed as being the first instant opening account in the UAE, still relies on a customer visiting an ADCB branch that has a touchpoint machine to process ID documentation."

"This is a far cry from being able to supply documents online and verify identity through biometrics on a banking app or through facial recognition. By allowing banks and other financial institutions to rely on UAE Pass, the Central Bank is helping to expedite the UAE’s move into the pure digital banking space," said Chowdhry.

The UAE Pass, first launched in October 2018, is a collaboration between the government agency in charge of facilitating Dubai’s digital transformation, Smart Dubai, and the UAE Telecommunications Regulatory Authority. The aim of the scheme is to provide all UAE residents with access to online government services, and act as an online verification tool.

It enables users to identify themselves to government service providers in all emirates through smartphone-based authentication, and also allows users to sign documents digitally with a high level of security.

The app can be used as a single digital identity across local and federal government entities as well as other service providers, now including financial institutions.

The move follows a number of developments in the digitalisation of the financial services industry in the Middle East. Within the last months the Abu Dhabi Global Market has developed a digital banking framework, and is now seeking applications from firms looking to establish a digital banking business in the Middle East, while Bahrain has implemented new open banking regulations.

Dubai has been running the ‘smart cities’ initiative for some time and is also cooperating with other regulators to drive the growth of fintech businesses in the country.