After conducting conclusive tests with 18 companies supported by 16 international banks, Belgian cooperative SWIFT has decided to make the KYC Registry available to its customers. Here are the details.
What is KYC?
KYC (Know Your Customer) is a process by which banks and financial institutions verify customer identity and potential risks before establishing a business relationship with them. This regulatory obligation is designed to prevent these institutions from being used intentionally or unintentionally for money laundering or any other illegal activity. In the event of non-compliance, banks incur heavy criminal and administrative penalties, and may be held civilly liable.
A service to meet KYC requirements
SWIFT is a Belgian cooperative that has established itself as the world leader in secure financial messaging. The fintech offers its users a messaging platform and communication standards, products and services facilitating access, integration, identification and regulatory compliance.
In 2014, SWIFT created KYC Registry, a tool that enables banks to exchange KYC information securely and support transparency and compliance efforts. Indeed, the company found that banking institutions were actively seeking common platforms to mutualize costs and risks. Via this service, organizations can transmit standardized information for the due diligence activities of correspondent banks. Once validated by SWIFT, this information can then be shared by the banks with their partners, with each bank retaining ownership of the data provided. This solution is a way for client banks to demonstrate transparency and efficiently manage information requests from their counterparties.
SWIFT extends KYC Registry to its corporate customers
In December 2019, SWIFT announced the opening of KYC Registry to its corporate customers. This follows a series of successful tests with 18 companies, including BMW, Spotify and Unilever, supported by 16 international banks. According to the cooperative, more than half the treasurers reduced the number of banks they worked with to avoid a lengthy KYC process. Indeed, to meet the regulatory requirements of each of their partners around the world, companies have to provide KYC data in several formats, a costly and time-consuming process.
Like banks, SWIFT's corporate customers will now be able to comply with applicable confidentiality rules while retaining control of their data. No data can be shared with a third party without the express authorization of its owner.
The register has already been adopted by 5,000 banks worldwide to reduce administrative complexity and speed up KYC processes. It is expected to be used by thousands of companies in the near future.