What does KYC mean?
In an increasingly global economy, financial institutions are more vulnerable to illicit criminal activities. Know Your Customer (KYC) standards are designed to protect financial institutions against fraud, corruption, money laundering and terrorist financing.
KYC involves several steps to:
- establish customer identity;
- understand the nature of customers’ activities and qualify that the source of funds is legitimate; and
- assess money laundering risks associated with customers.
Effective KYC processes are the backbone of any successful compliance and risk management programme, and the demands of meeting KYC obligations are intensifying. With anti-money laundering (AML) and KYC compliance growing in importance as more stringent regulatory requirements come into force, banks and corporates are dedicating significant resources and time to KYC compliance processes.
Although banks and regulators have indicated a willingness to move towards standardised KYC requirements and align internal processes, there is still a way to go. A number of initiatives, both global and local, aimed at improving the process on a global scale have come and gone. Overcoming these challenges requires a proactive and collaborative approach to cultivate change.
KYC compliance also plays a critical role in real-time, cross-border payments, facilitating greater levels of trust, transparency and collaboration, while mitigating risk. A community approach is essential to accelerate the compliance process and create new, more collaborative ways to address financial crime.
Our solution: Swift KYC Registry
To date, almost 6,000 financial institutions are using the Swift KYC Registry to publish their KYC data and receive data from their correspondent banks. It is recognised as the accepted standard for correspondent banking due diligence. The registry has now been extended to corporate customers of Swift to help simplify the KYC process between banks and corporates.
Case study: BNP Paribas and BASF
How BNP Paribas and BASF are streamlining their KYC information collection process