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Corporates cannot wait for KYC standards, they have to do something now. What about….

Our post “All agree KYC is a problem, but what is the solution?” had thousands of views and generated much debate including:

  • Peter Matza at the UK’s ACT: “The solution was staring us in the face. ISDA documentation is universally accepted, common standards and agreed variations between parties. That's where we should have started.”
  • BELLIN promoted their Virtual Bank Network solution which has an element of KYC as did Prescient a KYC technology company that specialises in KYC Due Diligence for regulated industries
  • Paul Stheeman, Interim Treasurer: 
    • “To answer your question at the end from a corporate perspective: Yes, corporates should be willing to use a platform, and just one. Anything to standardize and simplify the process as far as possible would be welcome. The fact that we now have three platforms in the market does not help. Can’ someone merge them so that we have just one standard???”
    • Agreed with Peter: “When KYC became an important topic several years ago, banks rushed out on their own and a whole scope of different standards were created. The difficulty which the options Martin and Jay face today will be becoming the accepted global standard.”

And at the recent EuroFinance conference in Barcelona, Damian Glendinning, Vice President and Treasurer for Lenovo and REL’s Francois Masquelier were two of many corporate treasurers saying that treasurers and banks need to push for KYC standards.

BUT

The problems are that:

  • Each bank and, probably each country, has their own standards, and they are changing as they react to pressure from regulators, and the cyberfraud world. Any fully agreed KYC standard between corporates, banks and regulators will take years to develop
  • KYC standards are and will be dynamic and change rapidly over the coming years
  • There are several third party KYC solutions: there is little? no? possibility of, for example, Thomson Reuters agreeing to close down their solution so that Bloomberg’s Entity Exchange can takeover, or of the reverse (Although we would love to listen to the discussion between Bloomberg and Thomson Reuters of such a proposal.)
  • Etc. (There many other problems.)

So, what can a corporate do right now:

  • Set up their own in-house KYC datases? But these cannot be a full KYC solution on their own
  • Just use one third party KYC provider and tell their banks to use that particular one? But not all banks will use or want to use that specific third party provider…..
  • Use two or three third party solutions whichever their bank is a member of? But this will require using at leas three different standards?
  • Wait for a single KYC standard to be developed? But what do you do in the meantime?
  • Do nothing, just rely on their banks? So, you are happy to continue with the same difficulties and problems?

CTMfile take: OK there are many more options and alternatives, but is there any solutions that makes general sense?


This item appears in the following sections:
Bank Relationship Management & KYC
Bank Fees Reconciliation & Negotiation
electronic Bank Account Management
Evaluating Banks' Overall Performance

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