The KYC Registry

Bart CLAEYS, Head of KYC Compliance Services, SWIFT

Financial Crime Compliance (FCC) What do we hear from regulators & banks?

• Strong pressure to implement EFFECTIVE systems, processes and policies across KYC,

Screening and Monitoring

• QUALITY ASSURANCE / INDEPENDENT TESTING increasingly necessary to prove

effectiveness and alignment to risk appetite

• Evolution towards senior level ATTESTATION/CERTIFICATION in some jurisdictions

• COST PRESSURE. Current situation not sustainable. Significant EFFICIENCY

improvement required – but not at the expense of an increased risk profile

• Growing COMPLEXITY of FCC regulatory requirements and expectations

• Reaching the tipping point for UTILITIES: openness from regulators and increasingly

strong drive from large banks

• Clear trend towards more TRANSPARENCY and more CONTROL, sometimes leading to

re-structuring of clients’ portfolios (de-risking) and internal organisation changes

KYC Registry 2016 - Nov 2016 - Central Bank Workshop - Restricted

SWIFT FCC Roadmap : Towards three inter-connected Utilities

Sanctions Analytics/AMLKYC

Interconnected Utilities leveraging commonalities

and data between the products & services

Financial Crime Compliance Utility

e.g.

• Transaction

screening

• Sanctions Testing

• List Management

• Name/Client

Screening

e.g.

• KYC Registry

• KYC Market Place

e.g.

• Compliance Analytics

(evolving toward

Bank-to-bank

monitoring)

• FATF 16

For ALL SWIFT users (small AND large) over time

KYC Registry 2016 - Nov 2016 - Central Bank Workshop - Restricted

The KYC Registry - Concept

Standardized KYC Baseline

Up-to-date information

Data verification by SWIFT

Cooperative business model

Confidential, user-control access

Single source of correspondent banking KYC information

The KYC Registry - Info session - Meeting with FMA - Nov 2016 - Restricted

… driven in partnership with leading Financial Institutions

DrivesAdoption

PromotesStandards

DesignsRoadmap

ValidatesFeatures

… and looking at the evolution with industry leaders like

More than 3,000 financial institutions across 1,150 FI Groups1,600+ in Europe, Middle East and Africa

800+ in Asia Pacific

500+ in the Americas

200+ countries and territories worldwide

30 central banks

Launched in December 2014 in collaboration with Bank of America Merrill Lynch, Barclays, Citi, Commerzbank, Deutsche Bank, Erste Group Bank AG,

HSBC, ING, J.P.Morgan, Raiffeisen Bank International AG, Societe Generale, and Standard Chartered Bank. 6

KYC Registry 2016 - Nov 2016 - Central Bank Workshop - Restricted

The KYC Registry – 30 Central Banks on boardSpecific community deals in Armenia, Bolivia, Dominican Republic, Georgia, Greece, Moldova, Panama, Costa Rica

KYC Registry 2016 - Nov 2016 - Central Bank Workshop - Restricted

0

200

400

600

800

1000

1200

Requester Groups Approached Entities Granting Entities

A clear upward trend

and acceleration over

the past weeks

2016 consumption – reaching a tipping point?

Category I - Identification of the customer Licenses and Proof of Regulation, Certificate of Incorporation, et cetera

Legal name, auditor, regulator, addresses

Category II – Ownership and management structure* Declaration of key UBO and shareholders : full names and identifying data

Board of Directors Lists: full names and identifying data

Group structure

Annual Reports, Shareholder listings, certified group and organisational charts

Category III – Type of business and client base Revenue breakdown by legal entity

Operating geographies and customer verticals

Category IV – Compliance information Enhanced AML Questions

AML docs: e.g. AML Controls, Wolfsberg Questionnaire, US Patriot Act

Category V – Tax information TIN, GIIN,FATCA information & proof of registration, documentation

A standardised KYC baseline… and evolving

* The KYC privacy policy sets out the roles and responsibilities of SWIFT and its customers with regard to the collection and processing of personal data

Transparency and Validation:

• Completeness and accuracy of validated information against supporting documents

• Coherence checks between documents

• Checking documents against public sources (where possible)

• Local format of document with an English version.

• No judgmental or subjective checks (e.g. veracity of AML-related questions)

• Validation undertaken by industry professionals who understand the context & are language

proficient

1 check/data field and on average 8 checks/document for 98 data fields and 34 documents

KYC Registry 2016 - Nov 2016 - Central Bank Workshop - Restricted

Thorough and evidence-based data validation

Since June 2016

What‘s next – Client lifecycle touchpoints • KYC Registry

Collection

Verification

AssessmentDecision

Monitoring

New client on-boardingPeriodic review

Risk Management

• KYC Adverse Media

• Advanced notifications

• Due Diligence Analysis

Data Quality

• Request KYC data updates

• Pro-active distribution of data

Client Coverage

• Invite your clients to join

• Non BIC banks / NBFIs

• Fund distributors

• (Corporates)

Content

• BWO / SWIFT Ref integration

• EDD baseline

• Selective data sharing

The KYC Registry - Info session - Meeting with FMA - Nov 2016 - Restricted

www.swift.com

KYC Registry 2016 - Nov 2016 - Central Bank Workshop - Restricted

KYC Registry 2016 - Nov 2016 - Central Bank Workshop - Restricted

The KYC Utility landscape

Industry Utilities and Registries

Solution providers

Clarient

Markit|Genpact

Thompson Reuters

SWIFT