2 April 2015

Frankfurt KYC Registry event attracts 70 compliance experts

Discussions highlight German banks' interest in community solution to reduce effort and cost of KYC compliance for correspondent banking.

A recent event in Frankfurt brought together 70 attendees from the compliance departments of banks from across Germany for an update on The KYC Registry for correspondent banking developed by SWIFT to reduce the effort and cost associated with "Know Your Customer" (KYC) compliance.

Opening the event, Jürgen Marstatt, Head of SWIFT Germany, reminded delegates that The KYC Registry was developed together with the industry - with a working group of 12 global banks contributing to the definition of processes, documentation and information required.

One of the 12 banks is Deutsche Bank. Dominique Feller of the anti-financial crime unit at Deutsche Bank in Frankfurt explained that more than half of its 500 staff working to fight AML worldwide deal with KYC on a day to day basis. She highlighted the importance of complying with relevant regulation and described how Deutsche Bank's customer due diligence (CDD) system recognises different risk groups - ‘simplified', ‘standard' and ‘enhanced'. Correspondent banking is classified as ‘enhanced CDD', due to the potential for high-risk customers' funds to be transferred via correspondent banks. Private wealth clients and PEPs (politically exposed persons) are also considered high-risk groups.

Monika Jacob-Schnitzler of Deutsche Bank's Trade Finance team emphasised the challenges the bank faces related to its activities in 65 countries. This requires a large number of banking relationships, in turn creating a multitude of related enquiries and generating extensive bilateral exchanges of information and documents. Using the centralised KYC platform as a one-stop-shop information source in the future will mean all procedures are simplified and efforts minimised, reducing KYC-related costs significantly, she told delegates.

Bart Claeys, Head of KYC Compliance Services, SWIFT, described the standard set of KYC data and documents agreed by the industry working group. Five categories - customer identification, ownership and management structure, business type and client base, and compliance and tax information, with mandatory/conditional and enhanced data - form the baseline of The KYC Registry. Thorough and evidence-based data validation provides a platform rich in features which will reduce the time it takes to manage KYC information - and cut the cost of this activity, Claeys said.

He also explained how the new SWIFT Profile - the first in a series of value-added KYC and CDD services - addresses the challenge of ‘Know Your Customer's Customer' (KYCC). It provides a global overview of an institution's correspondent banking activities by using aggregated SWIFT traffic data to help pinpoint areas of potential risk within specific jurisdictions. Banks can share this with their counterparties at their discretion using The KYC Registry while retaining full control over which institutions can view their SWIFT Profile information.

Claeys closed his presentation with an overview of the value-based KYC Registry pricing system (based on the principle of "pay for what you find and need"). Data contribution is always free, and data consumption is free in 2015, for those entities which contribute data and actively promote the use of The KYC Registry to their correspondents. 

Julien Laurent, KYC/AML Specialist, SWIFT, focused on how banks in the CEE region can implement The KYC Registry in their correspondent relationships, via their front office, KYC/onboarding and compliance teams. He also explained how The KYC Registry fits in the broader context of SWIFT's compliance roadmap. This growing portfolio currently includes the Sanctions Screening and Sanctions Testing services and the Compliance Analytics solution, alongside The KYC Registry. Laurent emphasised the value of collaboration in financial crime compliance - and how community-driven solutions can reduce cost and effort for every member of the community.

Closing the event after a lively audience Q&A session, SWIFT's Marstatt highlighted the deep insights shared during the discussions on the functionality and value of The KYC Registry.