Out-Law / Your Daily Need-To-Know

Out-Law News 1 min. read

Banks given extra incentive to register for new central KYC database

Banks that submit 'know your customer' (KYC) data they hold to a new centralised KYC database will be able to access other banks' KYC information on the database for free next year, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) has said.

SWIFT, which has developed the KYC Registry in a bid to make the process of conducting customer due diligence checks a less burdensome task, said 12 banks had already signed up to the new Registry which will not become more generally available until the end of this year.

"SWIFT will be making data consumption free in 2015 for those institutions that contribute their own information, making it easier for banks to work together to reduce the cost and effort related to KYC compliance," a statement issued by SWIFT said.

KYC is a term that broadly refers to the due diligence checks banks are obliged to conduct to ensure that their customers are who they say they are, and are not involved in money laundering activities or in financing terrorism, for example.

In January, Gottfried Leibbrandt, chief executive of SWIFT, said that banks had been asking SWIFT to "provide industry-wide solutions to streamline their associated processes, cut cost and reduce risk" involved in tackling financial crime. Barclays, Deutsche Bank, HSBC, Citi and Standard Chartered are among the institutions that have already signed up to participate in the new scheme.

"The KYC Registry helps SWIFT users comply with worldwide KYC requirements, while reducing the cost of compliance activities and the risk of non-compliance," SWIFT said. "SWIFT performs fact-based controls of information in the Registry to check for completeness, accuracy and validity."

"This approach enables banks to share and access the standardised set of qualified data and documentation needed to fulfil correspondent banking KYC obligations and customer due diligence requirements. Registry users will retain ownership of their KYC information, along with control over who can access it via the secure online platform," it said.

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