The three largest banks in the Netherlands will soon launch a pilot platform for sharing customer due-diligence data with each other in efforts to streamline know-your-customer processes involving corporate clients.
As part of the project, or “proof of concept,” compliance officers with ABN Amro, ING and Rabobank within weeks will begin sharing KYC information, such as organizational charts, data on beneficial owners and annual financial reports on legal-entity clients that have given their express consent to the exchanges.
The lenders want to learn if the initiative, which national regulators support, can reduce costs, provide compliance departments access to better, more timely KYC data and ease the burden on corporate customers, Mark Hanhart, ABN Amro’s global compliance head for anti-money laundering and sanctions, told ACAMS moneylaundering.com.
“Joining forces will enhance our gatekeeper function simply because we’ll have more eyes on the same client,” Hanhart said, referring to ongoing monitoring of existing legal-entity customers. “It’ll be easier to keep due diligence files up-to-date.”
Changes in the makeup of a corporate customer’s legal structure, for example, often go unnoticed by compliance officers because clients do not always inform their banks when they occur, according to Hanhart.
With the joint venture in place, however, each of the participating banks would stand a greater chance of learning of such changes, reviewing them for due-diligence purposes and collecting new information.
European financial institutions face increasingly stringent rules on gathering, keeping and updating due-diligence data, while corporate clients often struggle with time-consuming requests for information from a range of financial institutions and in different formats.
Inefficient KYC processes can slow down transactions, increase compliance costs and heighten firms’ exposure to financial crime.
These challenges have led to the emergence of a plethora of KYC databases that private firms make accessible to financial institutions on a subscription basis, as well as public-private, KYC information-sharing initiatives in the United Arab Emirates and Singapore.
But the trio of Dutch banks want to learn from failed KYC ventures that put the burden on clients to upload their due-diligence information to a central portal and perished from a lack of buy-in.
The banks intend to set up a joint back office where data exchanges occur only after clients have given their consent. Meanwhile, customers will continue receiving requests for documentation only through their existing banking relationship rather than through any new relationships.
“We want to stay away from the concept that led many KYC utilities to fail, particularly where such a utility came to stand between the bank and the client,” Hanhart said.
The banks will collect and exchange data on a limited number of shared corporate clients during the pilot project.
Joining forces will allow the banks “to enhance a sustainable, trustworthy and reliable financial system,” Angelique Meddeler, global KYC lead at ING, the country’s largest lender, said.
The KYC initiative resembles a project launched by the five largest lenders in the Nordics. In May, Denmark’s Danske Bank, Norway’s DNB and Sweden’s Handelsbanken, Nordea and SEB disclosed plans to share KYC data on large and midsize corporates with the same goal of streamlining due diligence.
The Dutch project arose during discussions between financial institutions and national authorities, including the central bank of the Netherlands, the Fiscal Information and Investigation Service, and the Dutch financial intelligence unit on how to make the country’s anti-money laundering regime more effective.
“We repeatedly said throughout last year that we believe banks can do more to ensure compliance with anti-money laundering laws,” a central bank spokesperson told moneylaundering.com. “We believe it’s a good idea that banks are exploring initiatives to enhance their customer due-diligence processes.”
|Topics :||Anti-money laundering , Counterterrorist Financing|
|Document Date:||January 11, 2019|