Whilst utilities have been widely predicted as a future staple in the fighting financial crime ecosystem, many have tried and few succeeded in establishing platforms to make the KYC on-boarding and periodic review processes more efficient, secure and reliable. An exception is SWiFT’s KYC Registry established in 2014, it has grown and is already a trusted repository for important KYC information on Bank’s which is leading it to now look to the Corporate market too. In this interview Bart Claeys talks to Financial Crime News about SWIFT’s KYC Registry, what it does, why it’s important and what’s next?
FCN: What is the SWIFT KYC Registry and why is it important?
BC: SWIFT has spent decades facilitating the smooth flow of cross-border payment services, which today also requires parties involved to trust and verify their direct partners in the payment chain and so it’s natural for SWIFT to play a role as a trusted intermediary for financial institutions to both file and receive information to help conduct KYC enquiries. The SWIFT KYC Registry helps participants complete KYC in an efficient and credentialed way.
That KYC has become more challenging, costly and time consuming as regulatory expectations have increased and risks are better understood, the information needed to evaluate correspondent banks is at an all time high, which explains the rationale for the KYC Registry. Whilst there will always be exceptions, and the need to source additional information, especially in very high risk situations, the vast majority of information required for Banks to conduct KYC is housed in the KYC Registry, saving time and money without affecting quality.
FCN: How did the SWIFT KYC Registry come about?
BC: SWIFT launched the KYC registry in 2014, to help address the on-boarding and periodic review challenges faced by Banks. The KYC Registry was developed in consultation with 18 global banks, (including Wolfsberg Group Member Banks) who still today play an active role in the development and adoption of the KYC Registry across the globe. Today, more than 5.500 banks across 200 territories have registered and have integrated the KYC Registry as their primary ‘preferred’ source of Correspondent Banking KYC information
The KYC Registry facilitates the exchange of documentation to support the identification and verification process, which is often time-consuming and labour-intensive to maintain. Banks are able to exchange standardised data and documentation with one another in a one-to-many model for all locations. In addition, SWIFT independently verifies the data and houses it securely.
FCN: How does the SWIFT KYC Registry accommodate different standards, requirements and expectations around the world?
BN: This is one of the biggest challenges, and despite international standards, these are not reflected consistently globally so the KYC Registry addresses these challenges by setting global standards, with advise from a User Group of 18 large globally active banks.
FCN: what kind of information is collected?
BC: The information that is collected can be categorised around (1) Identification of the customer, (2) Ownership, (3) Type of business, (4) Compliance and (5) Tax Status. In addition since 2018, we have been collecting information sourced from the Wolfsberg Group’s Correspondent Banking Due Diligence Questionnaire.
The information supplied is always owned and controlled by the Bank supplying the data, which includes approx 700 data points and 40 documents creating a comprehensive and evolving set of correspondent banking and corporate KYC data points and evidentiary documents.
The KYC Registry allows banks to provide their KYC information in a standardised format, based on community-defined requirements (and including the most recent Wolfsberg CBDDQ), reducing the time spent filling out different forms and increasing the opportunity to focus on what’s important.
FCN: Beyond the Information supplied and transmitted what else does the KYC Registry provide?
BN: It provides:
- a flexible platform that enables corporates to upload additional documents to cater for local jurisdiction specific requirements.
- an audit trail for all access requests, approvals, rejections and data enquiries are tracked and reportable within the tool for complete transparency of the end-to-end process.
- a highly-configurable alert system that helps banks with continuous awareness of changes in their correspondent or clients’ risk profiles and trigger an out-of-calendar review
FCN: What benefits does SWIFT’s KYC Registry provide?
BC: The registry delivers the following benefits:
- Provides a secure, online and easy-to-access verified and standardised KYC information for Correspondent Banks
- Reduces the administrative burden of documentation requests required for KYC (reducing bilateral exchange
- Enables compliance teams to refocus efforts on qualitative risk assessment
- Enhances security and GDPR compliance around exchanging personal data, and
- Improves the customer experience
FCN: Successful utilities deliver improved effectiveness and or efficiencies – what has the KYC Registry so far achieved judged by these criteria?
BC: Key to the ongoing success of the KYC Registry is our focus on effectiveness and efficiency.
The functional roadmap, content improvements and workflow enhancements are all geared to this direction. Whilst enabling cost reduction remains a central tenet, regardless of the size or maturity of the Bank (or in future) corporate), we believe providing high quality information from a central source based on credentialed approval provides a level of comfort to all those participating.
FCN: how big is the KYC Registry?
BC: The KYC Registry now manages KYC data on over 5,500 financial institutions across 220 countries. Approximately 20% of these FI’s have published a complete CBDDQ and made this available in the KYC Registry. We expect significant growth in the adoption of the KYC Registry as it becomes the de facto utility for Correspondent Banking information.
FCN: What’s next for the KYC Registry?
BC: This year, we will extend the KYC Registry to include major Corporates in addition to FI’s. We believe the dynamics which has made the KYC Registry a success equally apply to large corporates. Our aim is to speed up the identification and verification process between banks and their corporate clients, helping further improve the customer experience for corporates and reduce the administrative burden for banks.
FCN: How do we find out more about SWIFTS fighting financial crime offerings?
BC: The KYC Registry is part of SWIFT’s overall fighting financial crime vision to help the community it serves combat the growing challenges through the creation of inter-connected utilities in the context of KYC, Sanctions, AML and Fraud. For more information on how SWIFT can be part of the solution see here.
Bart Claeys is currently heading SWIFT’s KYC & Reference data utilities, a position he has held since March 2018. He is responsible for the strategy, product management and go-to-market activities related to SWIFT’s reference data portfolio (SWIFTRef) and The KYC Registry. Prior to this, Bart led the initiative to develop and drive global adoption of the registry, which helps correspondent banks increase the efficiency and effectiveness of Know Your Customer activities. Building on the success of both portfolios, Bart’s ambition is to evolve SWIFT’s reference data business in response to new trends linked to digital transformation, regulation and new technologies.
SWIFT is a member-owned cooperative that provides the communications platform, products and services to connect more than 11,000 banking organisations, securities institutions and corporate customers in more than 200 countries and territories. SWIFT enables its users to exchange automated, standardised financial information securely and reliably, thereby lowering costs, reducing operational risk and eliminating operational inefficiencies. SWIFT also brings the financial community together to work collaboratively to shape market practice, define standards and debate issues of mutual interest.