With an ever-increasing list of Know Your Customer (KYC) regulations for banks doing international funds transfers, financial messaging network SWIFT is developing a new report to help banks spot red flags and problem customers, Cash & Treasury Management File reported.
The report, called SWIFT Profile, is set to be available in January 2015. It will use aggregated SWIFT traffic data to provide a global overview of an institution’s correspondent banking activities, and help banks pinpoint areas of potential risk within specific jurisdictions so they can fulfill due-diligence requirements of KYC and anti-money-laundering regulations.
SWIFT Profile will also provide an overview of both the direct and nested correspondent banking activities of a specific bank — an increasing challenge, since banks typically have a hard time spotting transactions from apparently innocuous customers who are actually fronting for other entities that wouldn’t pass KYC muster.
Banks have the option of asking SWIFT to create their institution’s SWIFT Profile, which the banks can then share with their counterparties at their discretion, using SWIFT’s KYC Registry, which will launch in December 2014. Each bank will retain full control over which institutions can view its SWIFT Profile information.
Banks that contribute their own institution’s KYC data to the KYC Registry will be able to use the Registry free of charge in 2015, SWIFT said. Along with SWIFT Profile, the financial network plans additional value-added KYC and customer due-diligence services based on the KYC Registry.
The SWIFT Profile can also act as a business enabler for institutions that want to demonstrate more transparency on their banking activities to potential customers.
But its main purpose is to help make KYC assessments faster, less expensive and more effective. The SWIFT traffic analysis, while it can’t identify all indirect connections that might put a bank in the line of fire of anti-money-laundering and anti-terrorism enforcers, gives a broader view than most banks can get on their own.
SWIFT handles between 20 and 25 million financial messages per business day, and the majority of international interbank messages use the SWIFT network.
“Industry leaders and regulators alike have highlighted the importance of knowing your customer’s customer,” said SWIFT’s head of banking markets and compliance services, Luc Meurant, in a statement announcing the new report. “The SWIFT Profile will enable banks to better assess their counterparties’ own declared behavior and gain insights into potential risks posed by the activities of their counterparties and those institutions’ customers. Likewise, it will also help banks provide more transparency to their correspondent banking service providers.”