Banks seek to harmonise global compliance standards but KYC concerns persist

International banks are moving to harmonise compliance standards across international borders, according to senior bankers, some of whom continue to point out the apparent downsides of increased compliance demands.

Speaking at the SWIFT Business Forum London 2015, senior executives of Citi, Commerzbank and Lloyds Banking Group said that ever more stringent regulatory demands were driving the banking industry to work to high global standards of compliance.

Single standard

Senior regulatory advisor at Commerzbank, Thomas Piontek, said, “right now, we are running a project to harmonise local standards and…the global compliance manual so we have a stronger regime in certain locations. It is better to have one standard and if it is a higher standard, that is much better for the organisation.”

Citi takes a similar approach according to director and head of Europe Middle East and Africa Trade & Transaction Solutions and Anti-Money Laundering, Peter Drake.

He says Citi “has a particular challenge with the diversity of markets in which we are based” and that with a physical presence in more than 100 countries worldwide, the bank has an incentive to maintain high standards of compliance.

Potential downsides

Amongst bankers to point out the downsides of increased compliance requirements is Russell Saunders, global payments managing director at Lloyds Banking Group. He pointed out that the bank has had to pull out of some jurisdictions where compliance costs or risks outweighed potential rewards.

He also argued that regulators’ requirements in some jurisdictions mean it can be frustrating for smaller clients to handle requests. He cites the UK’s Money Laundering Regulations 2007 as one example. He says small- and medium-sized enterprises “don’t have time to have conversations about KYC. Medium sized corporates and SMEs are a real challenge for our relationship managers.”

Managing director of Equiniti Investment Services, Martin Taylor said, “the majority of our customers overseas struggle with the whole KYC process. The days of asking for a bank statement to prove who they are, are long gone. How do you make it easier for customers to prove who they are whilst meeting all of the different regulations?”

Categories: Trade Based Financial crimes News

Leave a Reply

%d bloggers like this: