More than 90% of treasurers report that responding to KYC (Know Your Customer) requests is more challenging today than it was five years ago, according to a survey by SWIFT recently.
In addition, more than 50% reduced the number of banks they work with to avoid lengthy KYC processes, negatively impacting banking relationships, survey results indicate.
KYC is a time consuming, cumbersome and repetitive exercise which many corporates, including APAC corporates, have struggled with, said Stella Lim, Head of Corporates and Financial Institutions, Asia Pacific.
“Some corporates have more than hundreds of accounts,” Lim pointed out. “Coupled with complicated corporate structure, changing regulatory requirements, submission of sensitive documents, treasurers spend a lot of time just on fulfilling KYC requirements.”
SWIFT created the SWIFT KYC Registry about five years ago and extended to the SWIFT-connected corporates starting Q4 2019, Lim said.
According to her, the KYC registry is an online centralised depository containing corporate information that can be accessed on permission basis.
It aims to streamline repetitive and time–consuming compliance process for corporates, Lim noted, adding that it’d help to standardise the document regardless of where the banks are located.
According to SWIFT, the registry currently has a reach of 5,500 banks while the organisation, through consultations with corporates and banks, has developed a standard baseline of documents and is achieving a global standardisation of 60% to 70% at this stage.
A user of the KYC Registry, DBS hopes to eliminate duplication and voluminous manual uploads.
“We’ve embarked on an initiative to simplify and digitalise the KYC interactions between large corporates and DBS,” said Terence Yong, Managing Director and Head, Western MNCs, Institutional Banking Group. “While the regulatory standards for KYC compliance across Asia are demanding and have variations, this doesn’t preclude us from using available digital platforms to ease interactions with customers.”
Outlook for the regulatory and compliance space in APAC
Lim said SWIFT is currently developing APIs to simplify consumption and contribution for the platform, as it builds the KYC Registry into a more integrated solution.
“We will look at introducing new technologies, like digital signatures, certification, and pre population of public information in the future, which will benefit CFOs and corporate treasuries in APAC,” she noted.
As the demands of international businesses for speedier cross-border payments continue to grow, banks are under increased pressure to keep these payments compliant and secure, Lim pointed out.
At the same time, regulators are focusing on international payments, which are subject to complex and expanding anti-money laundering (AML) and sanctions regulations, she observed.
“This means that compliance teams are being pushed to ensure their businesses remain competitive, as well as staying compliant. As a whole, the compliance function must evolve to support real-time, compliant cross border payments,” Lim said.