Technology and collaboration are key for banks facing a zero tolerance policy on financial crime compliance, delegates were told at SWIFT's 2014 London Business Forum. Steve Allen, head of global payments at Barclays, said accuracy of data must be the banks' number one priority across know-your-customer (KYC), anti-money laundering (AML) and sanctions compliance.
This article originally appeared in SWIFT at Sibos magazine.
"There is zero tolerance for most participants in financial services," he said. "You can send a customer statement to the wrong address and get that back, but you can't make a mistake in this space. Consistency is also important as most banks operate in multiple jurisdictions."
Although Allen insisted each bank was ultimately responsible for its own efforts to comply with financial crime regulation, he said they should also seize opportunities to work together, particularly on KYC.
Barclays is one of the latest global banks to join SWIFT's KYC Registry, an initiative unveiled earlier this year which will create a centralised repository to collect and distribute standardised KYC information among correspondent banks. Under development in association with leading banks including Bank of America Merrill Lynch, Citi, Commerzbank, JPMorgan, Societe Generale and Standard Chartered, the KYC Registry will provide a global platform of accurate KYC information that will increase efficiency and standardisation and minimise costs and errors through economies of scale.
SWIFT will host and manage the KYC Registry according to SWIFT's strict security and data protection policies and will check for completeness and accuracy and validate key aspects of submitted documentation. Member banks will have ownership of and responsibility for their own information.
The inefficiencies and risks of 7,000 banks worldwide bilaterally exchanging KYC compliance-related documentation could and should be avoided.
Reducing risk and inefficiency
Luc Meurant, head of banking markets and compliance services at SWIFT, said, "The inefficiencies and risks of 7,000 banks worldwide bilaterally exchanging KYC compliance-related documentation could and should be avoided."
"With these huge efficiency gains, banks can invest in the quality of the data," Meurant said. "Banks have invested massively in compliance, but in isolation from each other. As regulation continues to evolve, banks have come to the conclusion that this approach is not sustainable."
SWIFT has focused on creating a registry for correspondent banking because of the cooperative's existing expertise in the field. "We have the trust of our customers, we have global reach, and we have a long history of working with our community to foster collaboration and develop standardised solutions to global challenges," Meurant says.
The KYC Registry is set to become operational in late 2014. Around a dozen banks are actively participating in the project and twice that number are keen to participate in the pre-launch phase.
The Compliance Forum at Sibos will address the impact of regulation and how the industry can cooperate to mitigate compliance-related risk and costs. Attendees will learn about SWIFT's financial crime compliance services: Sanctions Screening, Sanctions Testing, the SWIFT KYC Registry, and Compliance Analytics.