Pakistan Banks Turn to Blockchain Technology to Update Customers' KYC Details Amid Economic Turmoil

Pakistan Banks' Association reached a deal with blockchain firm Avanza Innovations in Karachi last week.

Written by Radhika Parashar, Edited by David Delima | Updated: 6 March 2023 18:24 IST

Pakistan Banks Turn to Blockchain Technology to Update Customers' KYC Details Amid Economic Turmoil

Photo Credit: Unsplash/ Abuzar Xheikh

Pakistan is stregthening counter-terrorist financing (CTF)

Highlights

Pakistan is currently undergoing a major financial crisis
Banks in the country are looking to use blockchain to stop money launderi
Pakistan is also working on its central bank digital currency

Pakistan's banks have decided to develop a know-your-customer (KYC) platform based on blockchain technology in order to strengthen the country's efforts to curb money-laundering. Blockchain firm Avanza Group has been onboarded to create this platform, according to details shared by the Pakistan Banks' Association (PBA) which has signed an agreement with the Avanza Group for the initiative. The country is currently witnessing a decline in the value of its fiat currency.

Waqas Mirza, the CEO of the PBA and Muhammad Aurangzeb, the CEO of Avanza Innovations signed the paperwork in Karachi last week. The State Bank of Pakistan (SBP) is also part of this project, as per a Bitcoin.com report.

A momentous occasion! :handshake:

Pakistan Banks' Association (PBA) and Avanza Group signed the Project Contract for Pakistan's first Blockchain based National Banking Platform in Karachi on 2nd March 2023.#AvanzaGroup #AvanzaInnovations #AvanzaSolutions #demystifyingthefuture #PBAeKYC pic.twitter.com/2XMcxHoanL
— Avanza Group (@avanzagrp) March 3, 2023

With a KYC platform that relies on the blockchain, banks will be able to minimise onboarding costs for bank users. When financial transactions are recorded on blockchain, they are stored in an un-alterable format, permanently. This could also increase the transparency in Pakistan's existing financial systems.

The country is also strengthening its efforts towards counter-terrorist financing and curbing money laundering.

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Currently, Pakistan is undergoing a financial crisis. Internally, different parts of the country recently faced a spate of terror attacks. Amid the ongoing recession, the fiat currency of Pakistan sunk to a historic low of PKR 285 (roughly Rs. XXX) against the US dollar last week.

The country has hence, been shifting focus on incorporating blockchain and crypto as part of its financial system.

Pakistan has decided to select and licence electronic money institutions to issue e-money to facilitate digital payments.

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In December last year, Asad Umar, the Finance Minister of Pakistan had noted that dabbling in the growing blockchain sector will empower the country's trade and commerce industries, while bringing its fintech sector in competition with other nations.

In January 2022, Pakistan established three sub-committees to examine the crypto sector from all angles before the nation finalises its stance on crypto legalisation.

Amid legal uncertainties, India and Pakistan, that were the second and third highest adopters of cryptocurrency globally, respectively have fallen to fourth and sixth ranks last year, respectively, according to a Chainalysis report.

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Further reading: Cryptocurrency, Pakistan, Blockchain, KYC

Radhika Parashar

Email Radhika

Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More