Bank of America Merrill Lynch, Citi, Commerzbank, J.P. Morgan, Societe Generale and Standard Chartered have signed on as the first contributors to SWIFT’s Know Your Customer (KYC) registry.
The registry is a centralized utility for the collection and distribution of standard information required by banks as part of their due diligence processes. The banks will work together with SWIFT to build a service that will help banks manage their compliance challenges and reduce the high costs associated with implementing KYC-related regulations.
At the SWIFT Business Forum in New York on Tuesday, Luc Meurant, head of Banking Markets and Compliance Services at SWIFT, explained that while SWIFT will operate the KYC registry, the utility will be user-driven and user-controlled.
After building out the service with these first contributors, SWIFT intends for the utility to be used by the 7,000 correspondent banks on its network, rather than other types of institutions, as correspondent banks are SWIFT’s core competency. Plus, other groups are building similar services, such as the DTCC creating a KYC utility for broker-dealers. Over time, said Meurant, it’s possible SWIFT will partner with organizations such as the DTCC to create a broader utility, or perhaps add another partner for risk scoring based on the data collected.
For now, SWIFT’s registry works by having correspondent banks voluntarily contribute information that banks themselves are willing to share, with the goal being to bring efficiency to KYC requests. Rather than conducting KYC requests on a bilateral basis, meaning that there are often overlaps in information from various requests, creating a centralized source of information should bring efficiency to the market.
“The amount of bilateral back-and-forth on KYC is a tremendous amount of work…the productivity gain [from the registry] is huge,” said Dan Taylor, managing director, Global Market Infrastructures, J.P. Morgan.
SWIFT’s role will be to oversee the registry by validating the data, ensuring its accuracy and completeness. SWIFT will also offer value-added services, such as SWIFT Profile, which can provide a view of a bank’s activities over the SWIFT network, but only if the bank is willing to share this information with others.
“Everything is possible, as long as it’s optional,” said Meurant, referring to add-on information the banks can share.
Over time, SWIFT and participant banks hope that as more and more banks share information, others will join, as the risk of not sharing information could mean a loss of business, as banks will want to transact with those they have solid KYC information on.
Major Banks Sign Up to SWIFT KYC Registry
Bank of America Merrill Lynch, Citi, Commerzbank, J.P. Morgan, Societe Generale and Standard Chartered have signed on as the first contributors to SWIFT's Know Your Customer (KYC) registry.