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New Sibos paper recaps the rise of compliance utilities

New Sibos paper recaps the rise of compliance utilities

Financial Crime Compliance,
17 February 2017

Panellists: utilities are helping the industry reduce compliance costs, address regulatory requirements

In recent years, exploding compliance costs have spurred the development of shared utility solutions to help banks cut costs and standardise compliance processes.

While it’s still early days, industry experts at Sibos 2016 confirmed that such utilities are making strong progress – delivering cost reductions and efficiency gains, and garnering regulatory acceptance. In particular, panellists singled out SWIFT’s KYC Registry as demonstrating the benefits of collaboration for the industry.

A new paper – The rise of compliance utilities – panel summary – captures highlights from the discussion.

A key compliance cost factor is the lack of consistency around processes and data as a result of differing regulatory requirements and institutional policies. The KYC Registry, for example, addresses this by centralising information in a single, secure database, enabling banks to standardise their processes in line with globally accepted practices.

Panellists pointed out that shared utilities are being developed in a number of compliance domains, including KYC, sanctions (lists, screening and quality assurance) and data analysis.

And while banks have voiced concerns about how regulators might view utilities, panellists stated that overseers are warming to the                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   concept, as long as the right controls are in place. An important point, they said, is that utilities should not be regarded as outsourcing: they are simply an effective means of collecting information.

The experts concluded that joining shared utilities makes a strong statement about an institution’s commitment to market transparency and fighting financial crime. When building the business case for joining a utility, institutions should fully understand the benefits and know where it will be used within the organisation, they said.

Download the paper to learn more.

Read more about financial crime compliance at Sibos.

Make plans now to attend Sibos 2017 in Toronto.

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