benelux forum 2014 - kyc registry

SWIFT KYC Registry

Benelux Forum

Dominik Gajerski

20 March 2014

2

Financial crime is top of

the agenda for banks

A community issue calling for a community

solution …

Financial crime is top of

the agenda for banks

Significant costs

at stake….

All geographies / All types of

players impacted

... Yet no competitive

advantage for banks

Lots of duplication…

… for universal challenges

KYC Registry – Benelux Forum – 20 March 2014 – Confidentiality: Public

3

KYC Registry on the Compliance Roadmap

FATF 16 Information quality

Compliance Analytics

Sanctions list

management service

Sanctions KYC AML

Processing

services

Traffic analysis

Standards

Data repositories KYC registry

AML testing & tuning

Sanctions Screening

Sanctions Testing & tuning

(transaction & client systems)

Traffic restriction (RMA)

Live

Development

Qualification

Exploration

Quality

Assurance

Client/Name screening


4

Introducing the

KYC Registry from SWIFT


The Context An unprecedented challenge to comply with KYC legal requirements

5

SWIFT

KYC

Registry

Complex and

inconsistent requirements

across jurisdictions

Cumbersome, repetitive

and inefficient bilateral

exchanges

Unavailability and poor

quality of information

Complex and

inconsistent requirements

across jurisdictions

Cumbersome, repetitive

and inefficient bilateral

exchanges

Unavailability and poor

quality of information


SWIFT KYC Registry in a Nutshell Your single source of correspondent banking KYC information

Industry-owned

Well established, neutral partner renowned for driving standardised,

industry-wide solutions

SWIFT

KYC

Registry

Collaborative & user-controlled

Banks submit, maintain and selectively exchange data through the platform

Unique value-add

SWIFT Profile increases transparency through unique, factual traffic

activity report

Complete & up-to-date

SWIFT continuously verifies and validates the

quality of the data

6

Global

Reach of 7000+ banks active in correspondent

banking, representing over 1 million relationships


Collection of data and documents • Structured data

• Supporting documents

• Maintenance

• Archiving and versioning

Controls • Completeness, validity, accuracy

Reporting and monitoring • Platform activity reporting and practices

• Audit trail

• Notifications of changes

Value added services • SWIFT Profile

7

I

n s

co

pe

Ou

t of scop

e


Name screening • List screening (PEP, blacklist checking)

• Alert management or bad press

Risk scoring • SWIFT proposed risk score

• Communication on (non)-accepted counterparties

Due Diligence • Around intermediaries

Regulatory watch and market practices

• Monitoring of legal/regulatory updates

What will the SWIFT KYC Registry be in its first phase

8 KYC Registry – Benelux Forum – 20 March 2014 – Confidentiality: Public

Registry Content & Controls

• Comprehensive set of data

• Directly provided by the source

• Supports multiple languages

• Electronic only

• User-controlled

• Fact-based and documented validation

• Yearly revalidation of all information

• Data quality ratings visible to all

• No judgemental or opinion-making controls

Co

nte

nt

Co

ntr

ols


Registry Content Structure

Entity summary

I. Identification of the Customer

II. Ownership and Management Structure

III. Type of Business and Client Base

IV. Compliance Information

V. Tax Information

• e.g. Legal and Business Name, Registered Address, BIC Code

• e.g. Banking License, Certificate of Incorporation

• e.g. Form of Organisation, Beneficial Owners

• e.g. Targeted Customers, Geographical Markets

• e.g. USA Patriot Act Certification, Wolfsberg Questionnaire

• e.g. FATCA status

Set of Proposed Controls

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Data Documents

Completeness Field is filled in and matches with

the type of requested information

Document

• is uploaded under the right category

• contains all required pages

• is filled in (e.g. fields completed, questions answered

and boxes ticked)

Validity Input/reconfirmed less than 1

year ago

• If expiry date: date should still be valid

• If no expiry date: document uploaded/reconfirmed less

than 1 year ago

Accuracy Cross-check with supporting

documents when available

• Information contained in the document must match

with data and across documents, e.g. name and

address

• Accuracy cross-checked with a trusted third party, e.g.

banking license validity checked regulator’s website or

listed company data validated with local exchange



Registry Features & Functionalities

• Search and view counterparty summary

• Request access to your counterparty’s data

• Access your counterparty’s data

• Watchlists and notifications upon update

• Add and maintain your own KYC data

• Grant and manage access to your data

• Receive reporting and audit logs

• Manage KYC users for your organisation

Contr

ibution

& a

dm

in

Consum

ption

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SWIFT Profile A standard traffic-based report

to support your KYC



SWIFT Profile A new way to bring more transparency on your correspondents’ activities

• Objective and factual, initially based on FIN traffic

• Helps validate declared behaviour

• Substantiates risk rating process

• Different levels of granularity up to the level of

nested correspondents

• Optional and shared at bank’s discretion

• Specific, transparent and unambiguous

• Does not contain competitive information

SW

IFT

Pro

file


SWIFT Profile – Granularity SWIFT Profile

Level 1

Does Bank A have correspondent

banking activity with entities located in

countries under close monitoring of the

FATF?

0%

<5%

5-20%

>20%

Direct (in/outbound flows)

Indirect (originating/beneficiary

country)

0%

<5%

5-20%

>20%

All currencies

US Dollar

All except US Dollar

Payments

Trade Finance

Country BIC Code Bank Name

Turkey TRBATRIS Turkish Bank A

TRBATRIS Turkish Bank B

TRBATRIS Turkish Bank C

TRBATRIS Turkish Bank D

TRBATRIS Turkish Bank E

TRBATRIS Turkish Bank F

TRBATRIS Turkish Bank G

TRBATRIS Turkish Bank H

TRBATRIS Turkish Bank I

Indonesia IDBAIDJX Indonesian Bank A

IDBAIDJX Indonesian Bank B

IDBAIDJX Indonesian Bank C

IDBAIDJX Indonesian Bank D

IDBAIDJX Indonesian Bank E

IDBAIDJX Indonesian Bank F

IDBAIDJX Indonesian Bank G

IDBAIDJX Indonesian Bank H

IDBAIDJX Indonesian Bank I

Identities of Bank A’s nested

correspondents per concerned jurisdiction:

SWIFT Profile Level 3 – “Nested Correspondents”

All currencies

US Dollar


Payments

Trade Finance

SWIFT Profile Level 2 – “Nested Countries”

Bank A’s correspondent banking traffic

with concerned FATF jurisdictions. Share

per country:

All currencies

US Dollar


Payments

Trade Finance

Direct (in/outbound flows)

Indirect (originating/beneficiary

country)

KYC Registry – Benelux Forum – 20 March 2014 – Confidentiality: Public 15

Optional split between US Dollar and other currencies

No information on absolute value or volume of transactions i.e. only percentages

Focus on correspondent banking with optional split between payments (cat. 1 & 2) and trade finance (cat. 4 & 7)

Scope initially limited to FATF’s list of “High risk and non-cooperative jurisdictions”

Level 1: Indication of the significance of the activity with FATF destinations expressed in three bands: 0-5%,

5-20%, >20%

Level 2: Indication of the significance of the activity in each of the countries – destination flagged as Yellow

(0-5%), Amber (5-20%) or Red (>20%) depending on its share in Bank A’s traffic exchanged with all

of the FATF destinations

Level 3: Identification of correspondents per concerned jurisdiction (e.g. BIC, Legal Name)

Quarterly updates with optional reporting of delta and trend evolution

Computed at the level of entity. Optionally also includes the entity’s subsidiary/branch activities

Could cover both direct (in- and outbound flows) and indirect (originating/beneficiary country) exposure.

SWIFT Profile – Content

16

Community Engagement

Advise, pilot and support the

go-to-market


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January ’14

• Formal announcement of the KYC Registry initiative

• Start of KYC Working Group

• Begin data collection with Working Group

September ’14

• Open the Registry for data contribution by a number of selected banks

December ’14

• Open the Registry for data contribution and consultation by all banks

• Commercial launch of the Registry


Timeline The journey starts today

Bootstrap Controlled ramp-up

General availability

Bootstrap Strategy Leverage large banks network to reach to the broadest community

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• Obtain a critical mass of information before

launching the platform

• Guarantee maximum reach quickly

• Ensure continuous population and

contribution of data

• Enforce completeness, correctness and

validity of the information

Boots

trap


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• Scope definition

• End-to-end content and controls definition STREAM 1:

Scope, content and controls

• Extensive testing of tool features and functionality; workflows; design and user experience

STREAM 2: Tool Piloting

• Fostering the usage of the Registry by your correspondents and the broader community

STREAM 3: Go-To-Market Support

• Contributing KYC-related data and documents of your entities to the Registry

STREAM 4: Data Contribution


KYC Registry Working Group 4 work streams

KYC Registry Working Group Participants 6 institutions engaged pro-actively with SWIFT


• Bank of America Merrill Lynch

• Citi

• Commerzbank

• JPMorgan Chase

• Société Générale

• Standard Chartered

• …

3 other MoU’s being currently discussed

21 SWIFT KYC Registry – 2014 – Confidentiality: Public

Controlled Ramp-up

• 10 to 20 banks (all segments) contributing with their data to the registry through the platform

• Participate to the KYC Registry design validation stream, feeding the KYC Registry Working Group

What?

• Influence the KYC Registry design

• Influence the data collection effort by on-boarding your counterparties

• Get extra support from SWIFT for your own on-boarding

• Lead by example towards your community and counterparties

• Benefit from a early adopters discount on data consumption

Why?

• Register by end of June 2014

• Start populating with data between September and December 2014

When?

22 SWIFT KYC Registry – 2014 – Confidentiality: Public

Controlled Ramp-up Next steps

• SWIFT to invite customer to participate to the controlled ramp-up

• Customer to confirm its participation

• Customer and SWIFT to agree on scope of entities to be documented

• SWIFT to provide a complete and detailed on-boarding pack that includes:

– The service description

– A step-by-step on-boarding document

– A named contact for support

• Customer to register to the KYC Registry platform and assign content manager users

• Customer to upload data and document on the KYC Registry

• SWIFT to monitor contribution and to perform controls on data

• SWIFT and customer to jointly track progress and address issues

• Customer to determine counterparties on-boarding priorities

• Customer to send invitation to counterparties

• SWIFT to follow-up on invitations

How?

KYC Registry – Benelux Forum – 20 March 2014 – Confidentiality: Public 23

Thank you

Bart CLAEYS

Head of Compliance Services - KYC

[email protected]

+32 2 655 34 50

Contact details


mailto:[email protected]

benelux forum 2014 - kyc registry

Economy & Finance