T
he World Bank estimated in its
June 2020 Global Economic
Prospects reports that the coro-
navirus-induced worldwide recession
caused the global economy to shrink by
as much as 5.2% by the end of this year.
The study’s authors anticipate per capita
income will shrink 3%.
Rising protectionism has cost the
global economy as well, according to
the International Monetary Fund (IMF),
which projected that US-China trade war
would shrink global economic output by
nearly a full percentage point—and that
was before the pandemic.
But those stresses can’t push aside com-
pliance. In fact, things like ‘knowing your
customer’ may be especially important as
fraudsters seek to leverage pandemic-
related confusion.
“Whilst many treasury teams currently
are focused on managing operational
stresses caused by the Covid-19 pan-
demic, it’s clear that simplifying know-
your-customer [KYC] processes is still a
priority,” says Bart Claeys, head of KYC
and Reference Data at Swift.
During any period of policy uncer-
tainty and increased regulatory activ-
ity, companies must remain “alert to a
heightened risk of fraud and financial
crime,” Amy Matsuo, leader of the US
Regulatory Insights Practice at KPMG,said in a recent white paper, Ten Key
Regulatory Challenges of 2020.
In the first half of 2020 alone, the
US Treasury Department’s Office of
Foreign Assets Control made 47 updates
to its Specially Designated Nationals and
Blocked Persons List, which identifies
individuals and companies subject to
economic sanctions by the US.
These relatively rapid changes have
only aggravated the familiar pain known
as KYC reporting. Regulators often have
quite diff erent format requirements for
KYC reporting—and the more juris-
dictions in which a company oper-ates, the more the burden compounds.
Maintaining numerous, and often bilat-
eral, reporting requirements has histori-
cally made it diffi cult for companies to
report material changes in their KYC
information to their banks and other
financial institutions. According to a
2019 study by Swift and EuroFinance,
“93% of treasurers say that responding to
KYC requests is more challenging todaythan it was fi ve years ago.”
And it’s time-consuming. A 2016
global Thomson Reuters survey found
that it took an average of 27 days per
year for companies to provide their KYC
changes and that more than two-thirds
(69%) had not passed on KYC changes
to their banks. A significant plurality
of the respondents (39%) reported that
they submitted only half or fewer of their
KYC updates.
“Traditionally, banks reaching out to
their corporate customers for renewing
KYC data can take too much time,” says
Spencer Schulten, executive director and
US head of Financial Crimes
Compliance at management
and technology consultancy
Capco. Reporting can be
spread across multiple systems
and can be out of date. “More
importantly,” he notes, “hav-
ing to follow up with custom-
ers to update KYC repeatedly can dam-
age the banking relationship.”MOVING FORWARD
Standardizing KYC reporting across
both fi nancial institutions and their cor-
porate clients took a signifi cant step for-
ward at the end of last year, when Swift
gave the corporate community access to
its Swift KYC Registry.Fraud
Alert
Trade wars, a pande-
mic and heightened
regulation are making
KYC processes a
priority and spurring
institutions like
Swift and the Fed to
standardize them.
By Rob Daly“Renewing KYC data can
take too much time.”
—Spencer Schulten, Capco52CORPORATE TREASURY SUPPLEMENT 2020|KYC