There are more than 1.3 million bilateral correspondent relationships across the banking industry, and many more across all businesses. Know Your Customer and Know Your Vendor have never been more important in today’s fraud riven business. Neu group estimate that the average time spent on KYC in a typical MNC corporate treasury department is 25 hours/week.
It would seem obvious that all businesses need to do is to adopt the same standard, but it is not that simple: there are local, national and regional variations in business and banking practices and standards. Not only this there are variations in the technology used by the different players and suppliers and the regulatory compliance requirements, e.g. Accuity research has revealed a significant increase in complexity for organisations involved in global trade.
Many suppliers of KYC and KYV, and identity solutions were exhibiting at SIBOS las month. All have different approaches with different standards and technologies. Major suppliers of KYC services, e.g. Thomson Reuters and Bloomberg, have withdrawn from the market as KYC is not easy or profitable for many players.
Swift KYC Registry: the information banks need for KYC compliance
Swift claims that “The KYC Registry meets the need for an efficient, shared platform for managing and exchanging standardised KYC data. SWIFT has worked with the world’s largest correspondent banks to define a set of data and documentation that addresses KYC requirements across multiple jurisdictions.”
It’s completely free for banks to upload their documentation to the Registry and share it with the institutions that they select. SWIFT validates the data rigorously, informs the bank if it’s incomplete or needs updating, and alerts your correspondents whenever your data changes. There are now over 5,500 FI members.
Swift KYC registry for corporates too
Swift’s KYC registry for corporates, which goes live this quarter, builds on SWIFT’s experience from providing a KYC registry banks worldwide. Sebastian Niemeyer - Senior Market Manager Corporates, SWIFT, responsible for shaping the corporates global product
believes that they are going to “make KYC work again - together”. (See his WEBchat with CTMfile here.)
Swift believes that they can achieve one global standard for KYC by using “the most relevant KYC information in the corporates space.”
Using multiple data sources
Another approach to building a single database is to use customer data from multiple sources to put together an understanding of your customer. encompass corporation do in their ‘robotically automated’ process which uses a whole range of sources to:
- conduct an initial risk assessment
- understand corporate hierarchy, discover the ultimate beneficial owner
- identify regulatory risk
- uncover adverse media
- continuously monitor for material changes
- build and maintain an audit trail.
Many other suppliers are using this or variations of this approach including:
- North Row who offer “One API to Help Developers Streamline the Client Onboarding Journey”
- Fenergo is working with Bahrain’s Electronic Network for Financial Transactions (Benefit) to design and implement a national Know Your Customer (KYC) utility that incorporates blockchain technology.
- Know Your Customer who provides end-to-end digital solutions that identify and verify companies and individuals prior to client on-boarding
- Tradle, the blockchain-based KYC solution, which is a full enterprise system that employs AI, smart contracts, APIs, etc. to enable faster deployment as individual FIs do not need to wait for others to join.
While groups of banks are getting together to develop their own solutions, e.g. Nordic banks have been given the go-ahead by the Europe Commission for a shared KYC platform for handling KYC data. Danske Bank, DNB Bank, Nordea, SEB, Svenska Handelsbanken and Swedbank have set up a joint venture company to build the platform. The new company is autonomous and will initially offer KYC services to the market that focus on large and medium-sized companies based in the Nordic region.
CTMfile take: Developing and maintaining one global standard and one database for KYC/KYV is probably an impossible dream, but that will not stop Swift trying. Corporates will need to make some hard choices as to which approach they support.
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