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How many KYC solutions do you need?

Large multi-national corporations typically have 10 or more bank relationship. Many small companies often use 2-3 banks if not more. Neu group estimate that the average time spent on KYC in a typical MNC corporate treasury department is 25 hours/week. François Masquelier, Chairman of Luxembourg Corporate Treasury Association, ATEL believes that “Banks try to alleviate some of the regulatory pressure on them by increasing the volume of KYC information they require from multinational companies.” And that, “Such multiple banking relationships make the management of KYC documentation and data to financial counterparties more time- consuming and complicated for corporates. Banks take longer to onboard corporate customers.”

KYC now no longer just covers just the information on your customer, it also includes all the regulatory data, and anti-money laundering data, etc. Basically now it includes everything that corporates need to send to their banks to answer. No wonder it takes so much time.

Types of KYC solutions

Many believe that what is needed is common standards and comprehensive lists of required documents. This is the approach that most KYC solution providers are taking, the exception is Bloomberg who believe that the way to automate the whole KYC process is by standardising the data, not the processes - see.

A recent EACT briefing note on KYC listed these types of KYC solutions:

  • Global market infrastructure solution, e.g. Swift register which will be for corporate members of Swift  only)
  • Bank only solutions, e.g. within the same bank group for its customers across the world
  • Independent solutions, e.g. 
    • Entity Exchange from Bloomberg (see)
    • Thomson Reuters’s REFINITIV “KYC as a service” (see)
    • IHS Markit KYC services (see)
    • Encompass (see)
  • National solutions, e.g. working groups in France and in Luxembourg are developing services on blockchain – DLT but limited to local banks.

The question for multi-banked corporates is, “Should we go for just one KYC provider or several?”

 A One-Stop-Shop or several different services?

If you are an MNC that is multi-banked, a KYC solution would require several single bank KYC or single country KYC services to solve the problem. It would be messy and require interacting with several services. 

A one-stop-solution appears to be much simpler and more effective, but which one would suit your needs? Key factors in the choice include:

  • Secure storage of your data
  • Countries covered
  • Banks covered
  • Flexibility to cope with new emerging standards and individual bank data demands
  • Secure and effective permissioning procedures
  • Continuous monitoring of material changes in organisations monitored
  • Audit trail procedures and technologies
  • Charging structure and levels
  • Time taken to implement.

Get involved

Many companies are already using KYC programmes, e.g.

  • Entity Exchange from Bloomberg has 3,000 firms and 250 banks on the service
  • Thomson Reuters’s REFINITIV has 400,000 complete and maintained KYC records, plus an entity database of 3m+ corporations and 280,000 funds.

Masquelier believes that “We treasurers have the duty to move and to adopt one or several of them rather than to keep complaining about unstoppable KYC compliance rules. No one knows what could be achieved within a reasonable time and at acceptable costs. Nevertheless, no one can complain if he/she doesn’t try to move things forward.”

CTMfile take: Standing to one side and just complaining is not an option, corporate treasurers need to get involved and start using these KYC services. Only then will they improve.

This item appears in the following sections:
Bank Relationship Management & KYC
Know Your Customer

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