Since launching in December 2014, SWIFT’s Know Your Customer (KYC) registry has users from across 109 countries. The registry providers a secure way to exchange a standardised set of information for correspondent banking KYC compliance, which aims to increase efficiency and reduce risk. Paul Taylor, director, Compliance Services, SWIFT, talks about the background to the registry, how banks have benefited from the utility and what is to come.
GC: What is the background to the registry?
PT: In 2011 Swift started exploring the possibility of offering products and services in financial crime compliance. That led to the launch of some sanctions tools, some transaction screening tools and some quality assessment tools with transaction screening solutions.
We have users in 110 different countries for the transaction screening solution, with 350 different entities using that tool at the moment. On the testing and quality assessment solution we have the top 20 banks on SWIFT using that today. As the community saw us start to move into this field and grapple with reduced return on equity and the need to try and mutualise and find ways to save money they started to approach us with louder voices to say “listen guys we think you can help us in other fields. Can you do some things with the data that you have access to in order to show us our payment flows versus high-risk jurisdictions.” So we developed compliance analytics, which was launched last year. They asked us if we could work with KYC and start working with some founding members of that solution in terms of defining what that means and how we approach that. All of that led to us announcing a roadmap of deliverables in Sibos 2013 and that began to get traction in 2014 when we started to launch some of these new products and services. So the KYC registry is something we built throughout last year, working with those banks in terms of how the system should look and feel and also what types of data that solution should be gathering. At this point we see users in 109 different countries. It doesn’t end there. SWIFT is in 215 different countries so we clearly have some way to go in terms of the banks who need to be using this solution.
This is where we are engaging people on what we are trying to do. That is where the news story is.
What is next for the registry?
PT: In terms of where we are heading clearly there needs to be more users across more markets. We are engaged with 100 different markets, we have seen fantastic support from central banks throughout the world, similar to the support we have seen on the sanctions solution where people are very different from a central bank perspective in terms of understanding what our products are, understanding the controls that our products can help with and having those central banks work with our communities and SWIFT to adopt this.
GC: What are the measurements of success for users of the registry?
PT: Some large banks have told us that they are spending hundreds of millions gathering documents and data and validating those documents and data – a big amount of money. The hope is that using such data sets and tools in order to gather that data and to have that data and those validations by SWIFT across certain elements of that data set will solve a proportion of that spend. We are talking about a couple of hundred million.
The other interesting thing is that a lot of people are viewing this particular tool of KYC as being a tool where they can try to make sure they are focusing the thousands of people they have on these processes on the highest risk areas as opposed to spending an inordinate amount of time on the lower risk individuals or institutions. 20% of their business is deemed high risk, 80% is deemed lower risk. There is an inordinate amount of time spent on the 80% to ensure the time, money and resources were spend on the people that were higher risk. That’s the other way to look at this in terms of saying we have a tool that’s there that can help me understand some of the risks within that process.
I have a session at Sibos 2015 where I will be able to get into some data points at that points as the utility will have been live for a few months.
SWIFT KYC Utility Gains Users From Over 100 Countries
Since launching in December 2014, SWIFT’s Know Your Customer (KYC) registry has users from across 109 countries. The registry providers a secure way to exchange a standardised set of information for correspondent banking KYC compliance, which aims to increase efficiency and reduce risk. Paul Taylor, director, Compliance Services, SWIFT, talks about the background to the registry, how banks have benefited from the utility and what is to come.