KYC: ‘Increased Guidance’ From Regulators Will Help Treasury 

During the opening session of the compliance forum at Sibos 2015, regulators discussed the intense scrutiny being placed on banks to crack down on money laundering and terrorist financing. That scrutiny has been passed along to banks’ corporate clients, which has become a major headache for treasury departments.

Tai Boon Leong, Executive Director, Banking Department, Banking and Insurance Group, Monetary Authority of Singapore (MAS), stressed that banks must create detailed risk profiles of their correspondent banks. Many banks are also creating risk profiles of their corporate clients through know-your-customer (KYC) requirements, and there has been a lot of talk in the treasury community that banks are overreaching and targeting the wrong people. Often, companies are asked to provide detailed, personal information on their CEOs, board members, etc., and this information may not even required by the regulators themselves.

To solve this corporate/bank schism, Tai believes that “increased guidance” on the KYC process from the regulators themselves will help. “I think banks are not very clear on what is required,” he said. “That’s why at MAS we’ve been keeping up on guidance and examples of what is required.”

Je-Yoon Shin, President of the Financial Action Task Force on Money Laundering (FATF) believes that streamlining KYC is one area where regulators are making progress. “One of the alternatives is to use a centralized platform,” he said. “You don’t need to ask details on a specific person if the person or corporate is registered in SWIFT’s KYC Registry.” While, SWIFT’s KYC Registry currently only pertains to bank-to-bank relationships, similar utilities like the Thompson Reuters Org ID have been extended to corporate clients.

Shin noted that FATF standards do not have a “know-your-customer’s-customer” (KYCC) component; they are at present only concerned about correspondent banking relationships. “But one exception is, if there is a high-risk, then you have to know,” he said. “So [banks] have to know what the high-risk areas are. But it should be very specific and limited.”

Source: AFPonline – KYC: ‘Increased Guidance’ From Regulators Will Help Treasury

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