CTMfile’s post last week, Is there a solution to corporate treasury’s KYC problem?, generated an immmediate response from Paul Stheeman, Independent Treasury Consultant & Interim Treasurer: 

• “The major problem with KYC is the lack of standardization in banks' requirements. This leads to having to re-invent the wheel every time a new banking relationship is entered into. Even using the same bank in various countries is usually not a help as KYC is managed by banks locally and here there also can be significant differences.”

And responses from many others, but is it really all the banks fault? Who should be responsible for KYC standards? Sadly, there are very different solutions.

The KYC Registry from SWIFT 

SWIFT have set up The KYC Registry to solve the problem of there being 1.3 million bilateral correspondent relationships across the industry which is a huge administrative burden for banks each time a relationship is added, or information needs updating. Yet it’s never been more important to ensure that due diligence on your correspondents and their downstream relationships is thorough, timely and accurate.

So they set up The KYC Registry for banks to upload their documentation on SLAs, and other standards, and share it with the institutions they select. (It is only available to the selected banks.) SWIFT validates the data, informs the bank if it’s incomplete or needs updating, and alerts their correspondents whenever the data changes.

SWIFT worked with a group of international banks to define a baseline set of documentation that addresses KYC requirements across multiple jurisdictions. These include, for example:  

• Customer identification
• Ownership and management structure
• Types of business and client base
• Operating geographies
• Compliance information (such as Enhanced AML Questions, responses to the Wolfsberg AML Questionnaire, and USA Patriot Act Certification)
• Tax information (TIN, GIIN, and FATCA).

The KYC Registry prompts data contributors to upload the required documents, reducing errors and promoting user confidence. As a result, Registry users receive standardised and comparable information from their correspondents, in an agreed format.

Thomson Reuters Org ID

Thomson Reuters offer a managed service for banks and corporates for KYC compliance. Earlier this year, they acquired Clarient and Avox to round out their service and some of the world’s biggest banks (Barclays, Credit Suisse, Goldman Sachs, JP Morgan, and State Street) have now integrated their KYC solution – Clarient – into Org ID. 

Thomson Reuters’s Org ID service now manages over 350,000 KYC records, 1.25m managed legal entities, in over 140 countries. Org ID continuously monitors for change and automatically refresh client due diligence information.

KYC.com 

Kyc.com is a joint venture set up in 2014 by Markit, a leading global diversified provider of financial information services, and Genpact Limited, a global leader in transforming and running business processes, operations and technology. The kyc.com service was designed in partnership with the original founders - Citi, Deutsche Bank, HSBC and Morgan Stanley - to standardise and centralise the collection and management of KYC data for financial institutions to speed up client on-boarding. The objective of KYC.com is show by their strapline: The future of client due diligence

Their next stage in the development in building a fully integrated KYC ecosystem was when three major players - Dow Jones, Exiger, and Regulatory DataCorp - partnering with kyc.com to provide a comprehensive integrated service for banks, investment firms and corporates through to small and medium enterprises.  This strategic partnership will deliver an end-to-end know your customer on boarding covering sanctions screening, negative news searches and client risk assessment. 

A key feature of the KYC.com offering is that the service is based on a three step process:

1. development of common global data standards and policy
2. mutualizing costs
3. sharing the information.

All KYC.com members have to comply with the global KYC standards - both the data and processes - that KYC.com have jointly developed. 

Who should drive global KYC standards?

The need for global standards is shown by consultancies, such as PwC, publishing guides on Understanding global KYC differences and it is now generally accepted that KYC and due diligence standards need to cover both the data elements and the processes. But who should drive the development of global KYC standards.

At the moment we have quite different approaches being adopted by SWIFT, Thomson Reuters and KYC.com using their own data and process standards.

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CTMfile take: Maybe the only solution is for the treasury associations to get together and drive the development? If they don’t, who will? Who can make this happen?