Trésorier/Treasurer magazine - N°93 - Apr/May/Jun 2016 - (Page 32)

Easing the Burden - Is a global KYC standard needed? LE MAGAZINE DU TRESORIER / TREASURER MAGAZINE - N°93 - APR / MAY / JUNE 2016 Regulations governing anti-money laundering and Know Your Customer (KYC) have been a topic of frustration for corporate treasurers for some time now. The Financial Action Task Force (FATF) 2012 recommendations that are being adopted and implemented in countries around the world have significant consequences for corporates as they now not only have to respond to their financial institutions (FIs) request for information but they also have to proactively update their FI when material changes happen within their organization. 32 While treasurers' expertise in both due diligence and financial risk management has equipped them to take a role in the process, it has become increasingly more apparent that a global standardised approach is warranted that won't add significantly to the administrative burden, or interrupt business operations. But is a KYC standard in fact achievable? FATF and its impact on corporate treasury For companies working with a single bank, in a single jurisdiction, supporting the bank's KYC process by providing the necessary company, shareholder and officer information has proven to be relatively straightforward. For multi-banked corporations operating internationally, however, the documentation and resource implications for corporate treasury have been very significant. As each country transposes the FATF recommendations into its own national law, it is often the case that banks and FIs interpret them differently. Not only do KYC regulations differ across countries, but banks also adopt their own risk management procedures, which may also vary across jurisdictions. With no consistent legislative standard, corporates are frequently asked to provide different sets of information for each financial institution that they do business with, leading to frustration and a significant duplication of effort. FIs often err on the side of caution and request the original in addition to the electronic version of documents. This is compounded by the treasury department being uncertain as to when a financial institution will lodge its next request. This administrative burden may be further complicated in certain sectors (mining for example), where FIs automatically deem participants as high risk and will demand a KYC refresh more often. As the complexity and number of regulations continues to grow, all stakeholders, including FIs and corporates, need to understand the impact of additional regulation. The gathering and maintaining of all necessary information add costs and takes the focus away from other business priorities. Leveraging technology and data assets As KYC checks and on-boarding requests for information proliferate, it is taking longer to open new bank or trade accounts, while routine data requests are also becoming more frequent and onerous. This is leading to demands amongst corporations for banks to standardise the timing and nature of data requests. The largest multinational corporations with considerable influence on their primary partner banks are inevitably more persuasive in encouraging their banks to support greater standardisation; even so, many will also have accounts with a far wider pool of banks where they might lack the same level of influence. Inevitably, smaller organisations that may also hold a large number of accounts across multiple banks might find it more difficult to be persuasive as their larger peers.

Table of Contents for the Digital Edition of Trésorier/Treasurer magazine - N°93 - Apr/May/Jun 2016

Cover
Table of contents
EDITORIAL
FINANCIAL HIGHLIGHTS Luxembourg Tax News
INTERVIEW David Blair - How should we set up an efficient KYC Process?
FOCUS
IFRS 9: Hedging - Treasurers will love it
From 17 to 16 reLEASE of the new LEASE accounting standard
Block chain - Is this buzz word turning into a reality?
Bank Single Gateway, the Plumbing of Bank Connectivity
FORUM
Geopolitical threats for the year ahead
Treasurers proceed with caution
Des difficultés en série pour les nouveaux entrants
Easing the Burden - Is a global KYC standard needed?
European trade repository of the year
La dette senior Européenne, un regard nouveau sur l'obligataire
CORPORATE FINANCE
Stay connected with cloud treasury technology
From stone age to straight through processing
Differentiators for treasury management systems
Complete securities financing solutions for corporates
A full and balanced "meal" for your retirement?
15 MINUTES WITH FinMetrics
THE FINANCIAL RISK OBSERVATORY
NEWS
LIFE BEYOND NUMBERS

Trésorier/Treasurer magazine - N°93 - Apr/May/Jun 2016