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Swift signs major banks to KYC Registry

04 March 2014  |  9747 views  |  2 Swift logo

Interbank messaging network Swift has recruited a group of major banks to help develop its centralised KYC utility for the collection and distribution of standard information required by banks as part of their due diligence processes.

The group, which includes Bank of America Merrill Lynch, Citi, Commerzbank, JPMorgan, Societe Generale and Standard Chartered, will work together with Swift to build the service, which is intended to help banks manage their compliance challenges and reduce the high costs associated with implementing KYC-related regulations.

Swift says it will operate the KYC Registry as an industry-wide utility with an initial focus on correspondent banking relationships. More banks are expected to join the initiative in the coming months.

Javier Pérez-Tasso, chief marketing officer, Swift, says: "It is encouraging to see the banks coming together around this initiative, which clearly demonstrates the value community-based solutions can bring to this challenge."

As a part of the MOU, the banks will participate in a Swift-led working group to agree the Registry's processes as well as the documentation and information necessary to fulfil KYC requirements across multiple jurisdictions. In addition, the banks will start populating the registry with their own KYC data.

Each Registry user will have a standardised access point to obtain details on their counterparties, while retaining ownership of their own information and control over which institutions can view it.

Pascal Augé, head of global transactions & payment services, Societe Generale, says: "One of the major challenges with KYC activities is maintaining accurate information. Having a single, centralised Registry for up-to-date KYC information will reduce the time, effort and cost related to gathering, accessing and sharing KYC information."

Swift's KYC Registry faces competition from a number of other competing initiatives which promise to help financial services firms as they struggle to collect monitor and maintain the up-to-date, proprietary information necessary to meet the dynamic requirements of global mandates such as KYC, AML, Dodd-Frank, Emir, Fatca and Gatca.

In January, Switzerland-based KYC Exchange launched a Web-based communication platform for Know Your Customer (KYC) and Customer Due Diligence (CDD) data sharing for the international banking community.

The following month, Strevus, a San Francisco-based startup providing data sharing risk and compliance management technology to financial service institutions, raised $5.6 million in a series a funding round led by Blumberg Capital.

Comments: (2)

Jeanne Capachin
Jeanne Capachin - Capachin Research - Norfolk MA | 04 March, 2014, 13:38

Although there will be concerns about reducing competition, this is I think the right kind of a solution for Swift to offer. They've got the data, the controls, and the ability to develop a solution that will be workable for banks and acceptable across jurisdictions. Here's to working out the details!

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A Finextra member
A Finextra member | 04 March, 2014, 18:32 A useful step that is necessary but not sufficient. There are two factors at play here: who is the purchaser and what can he afford? The latter point further subdivides into a) can he pay for it upfront? And b) do we trust him enough to allow him a credit line? Credit rating can only be relied upon when we are sure we have the correct purchaser identity, and a credit rating dished out by an agency may be wrong or out of date. Liability should not exist, even after re fence to a credit rating agency, it is the vendor who must make the loan decision and thus he who takes the risk; there should be no discussion about retribution.
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