Simplifying the KYC process for corporates and banks – interview with SWIFT

Marie-Charlotte Henseval, Head of KYC Compliance Services at SWIFT, talks about the cooperative’s mission to provide solutions that simplify the KYC process for all participants involved

Historically, KYC has been a cumbersome process – slow and repetitive for both financial institutions and corporates. Despite technological advances, it’s not gotten easier. KYC continues to be one of the biggest challenges in the compliance space, both for financial institutions and corporates. Over 90% of treasurers report that responding to KYC requests is more challenging today than it was five years ago. In addition, over 50% of them reduced the number of banks they work with to avoid lengthy KYC processes, negatively impacting banking relationships.

Corporate groups work with multiple banking partners across the globe, many of which are in different regulatory jurisdictions. This means that corporate treasurers have to provide KYC data in multiple formats, often through bilateral exchanges, in order to meet the regulatory requirements of each partner, which is costly, time-consuming, and inefficient.

Meanwhile, banking partners have to reach out to their corporate customers for information or search for data across multiple sources only to find it is often incomplete or out of date. In many cases, they have to repeatedly follow up with existing customers as part of regular KYC reviews, which can strain relationships. 

You mentioned in an interview for Global Trade Review from September, 2019 that SWIFT’s ambition is to create a ‘one-stop-shop for banks to access information about all their clients’. Could you tell us more?

The key to effective KYC is information sharing. Data can be unstructured and non-standardised, meaning multiple different versions of the same information have to be repeatedly submitted to counterparties. By simply sharing information in a standardised format, corporates and banks can save vast amounts of time and resource.

This is why we created SWIFT’s KYC Registry. It aggregates KYC information in a globally recognised, standardised format, providing banks with a centralised database with everything they need.

The registry, set up in late 2014, is currently used by more than 5,500 financial institutions, representing more than 80% of the traffic that flows over SWIFT’s network. The standard defined for correspondent banking includes the latest Correspondent Banking Due Diligence Questionnaire (CBDDQ) from the Wolfsberg Group and covers up to 90% of the information that global banks typically require for due diligence, making it one of the most comprehensive KYC tools on the market.

The SWIFT KYC registry opened to corporates at the end of 2019, following a successful testing period with 18 leading corporate groups, including BMW, Spotify, and Unilever, along with 16 global banks representing over 7,000 corporate-to-bank relationships on SWIFT. The registry provides corporates with the opportunity to upload their information in a standardised way so that all their banks can access the information required. Initially the solution was opened to corporates that are already using the SWIFT network. We aim to extend it beyond SWIFT-connected corporates over time to bring the benefits of the registry to all banks and corporates. 

What are the benefits for entities (banks/corporates) joining the KYC Registry?

Corporate groups benefit from the ability to structure their KYC data in a standardised format, agreed by banks and corporates across the globe, and have their data checked by SWIFT for completeness.

Through the registry, corporates and banks will have access to the Wolfsberg Group’s CBDDQ. This enables them to implement an enhanced and reasonable standard for cross-border and/or other higher risk correspondent banking due diligence, reducing any additional data requirements.

They will also be able to comply with data privacy rules by remaining in control of their data, deciding which banks have access and having the ability to update their records in real-time.

For banks, the registry offers a single source to collect standardised and up-to-date KYC information about their correspondents, be it banks or corporates. It eliminates the burden of having to deal with multiple sources, contending with outdated data and repetitively reaching out to correspondents.

In 2019, a number of competitors have withdrawn from the KYC space, raising questions around the viability of the utility model. How confident are you in the utility model?

If you look at the landscape today, it’s fair to say that SWIFT’s is the only truly global central KYC utility that remains in the market. One of the reasons for this is that cracking and solving the KYC problem is not easy and takes time to address – even if you come up with a great solution, it still takes time for banks or corporate to change policy, to feel comfortable with the technology, and to look at embedding it into their business processes.

One of the differentiators for us is related to our setup as a cooperative. We are not a commercial venture looking at some point for a very specific return. We are there to bring the global financial community together to everyone’s benefit.

What is in store for SWIFT’s registry for the next 5 years?

Through our working group and engagement group, we are currently engaging with over 100 corporates and banks to open the SWIFT KYC Registry to corporates globally. The aim is to eradicate most of the lengthy bilateral exchanges that exist today.

Collaborating with banks and corporates has provided detailed insights into the current barriers to effective KYC due diligence and, through our global platform, we will continue this work to provide solutions that simplify the KYC process for all participants involved.

The article was first published in the Digital Onboarding and KYC Report 2020, which offers insightful editorials on topics such as digital onboarding best practices and key challenges, financial crime and how to fight it, crypto, and more.

About Marie-Charlotte Henseval

After five years as Product Manager of the SWIFT KYC Registry, Marie-Charlotte is now globally responsible for KYC Compliance Services. From 2010 to 2013, Marie-Charlotte was Market Manager for Corporates on SWIFT, contributing to the development of the SWIFT for Corporates offering. She joined SWIFT in 2008 in the Operations department after graduating as a Civil Engineer, and holds a Masters in Management Sciences.

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