The Society for Worldwide Interbank Financial Telecommunication (SWIFT) said the new global KYC Registry is "under development" at the moment but would go live some time later this year.
KYC is a term that broadly refers to the due diligence checks banks are obliged to conduct to ensure that their customers are who they say they are, are not involved in money laundering activities or in financing terrorism, for example.
SWIFT said that it would collate information from "participating banks" and "host and manage" the database. It will take responsibility for "verifying the completeness, validity and accuracy of the data" although individual banks that provide the information will continue to own the information and be responsible for it.
"KYC compliance presents a major challenge for many banks," Luc Meurant, head of banking markets and compliance services at SWIFT, said. "Collecting and maintaining up-to-date information about other institutions and performing due diligence checks on correspondent banking partners are time-consuming and duplicative tasks for banks. By developing a central, global KYC Registry, SWIFT can help banks reduce KYC-related costs and mitigate compliance-related risks, enabling them to manage better their financial crime compliance processes."
Gottfried Leibbrandt, chief executive of SWIFT, added: "Compliance with financial crime regulation is one of the major challenges that banks face globally, and customers have been asking us to provide industry-wide solutions to streamline their associated processes, cut cost and reduce risk."
Technology law expert Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com, said: "This is a great example of how innovation is being used to drive efficiencies and cost savings into the banking sector. Similar UK focused services are being looked at to improve the take-on of retail customers but these aren’t live."
"The challenge for any service like this is that traditionally conservative organisations need to make judgement calls on the extent to which they will open up their KYC/AML procedures and become reliant upon information gathered by others that follow different procedures – given the risks of getting KYC/AML wrong, this can be a tough call," he said.
Last year Morgan Stanley and HSBC confirmed that they were working with business processing sourcing provider Genpact and financial information company Markit on designing a new technical solution they hoped would help them adhere to KYC obligations more efficiently.
At the time Genpact and Markit said that the new service would allow businesses to interact faster with clients, provide for "significant cost savings through operational and technological efficiencies" and reduce the need for "multiple demands for documents and information".
"Centralising the collection and management of KYC documentation creates massive efficiencies for the industry and can save large firms tens of millions of dollars per year," Jeff Gooch, managing director and global head of processing at Markit, said. "Through technology and the standardisation of processes, we can increase data quality, speed operations and improve compliance."