Global banks back plans to reduce compliance burden
A group of the world’s biggest banks have agreed to join forces with Swift to develop and use a centralized due-diligence system designed to reduce the burden of compliance and the rising regulatory costs associated with it.
Bank of America Merrill Lynch, Citi, Commerzbank, JPMorgan, Société Générale and Standard Chartered are among the group to have signed an agreement to jointly launch Swifts know-your-customer (KYC) registry, which is a type of secure electronic repository for the masses of information required by banks as part of their due-diligence process on corporate clients all over the world.
More banks are expected to join the industry-wide initiative in the coming months, according to Swift, which says that its initial focus will be on correspondent banking relationships. Launch is expected later this year.
The KYC registry is designed to address these challenges, offering a powerful if rare public example of how banks are working together to resolve problems brought about by the regulatory onslaught.
Having a single, centralized registry for up-to-date KYC information will reduce the time, effort and cost related to gathering, accessing and sharing KYC information, says Pascal Augé, head of global transactions and payment services at Société Générale.
Udo Braun, member of the executive board, group compliance, at Commerzbank, adds that the registry will help our industry work more efficiently and effectively to support compliance, while David Fleet, managing director of client due diligence at Standard Chartered, says collaboration between banks in this way will help them better manage risk.
Under the agreement, the banks will participate in a Swift-led working group to agree the registrys processes, as well as the documentation and information necessary to fulfil KYC requirements across multiple jurisdictions. In addition, the banks are to start populating the registry with their own KYC data.
The banks involvement is an important step in this initiative to standardise the process and reduce the cost associated with KYC activities, says Luc Meurant, Swifts head of banking markets and compliance services. The commitment from these banks demonstrates the importance of collaboration in financial crime compliance.
Swift says that each registry user will have a standardized access point to obtain details on their counterparties, while retaining ownership of their own information and ultimate control over which institutions can view it.