Knowing your Customer

in the world of correspondent

banking

1 September 2015

• Fedra Ware, Practice Lead, Compliance Services, SWIFT

• Liliana Alvis Cruz, Directora de la Unidad de Cumplimiento,

Grupo Davivienda

• Luz E. Rios, Vice President, Sales –Head of AML/KYC Latin

America, Deutsche Bank

KYC: The foundation of an effective AML

program

Increasing regulatory and

market pressures

The industry must accept new expectations and manage growing

costs and potential real risk

of non-compliance

All banks require the same data -

there is no added value in doing separate

KYC data collection and

quality assurance

Every bank needs to be compliant, but there is no reward for being the best in class!

A Single Standard

Validated data

A feature-rich Platform

Unique value-add content

Community-lead engagement

The founding principles

The KYC Registry: a standard set of KYC data & documents

A clear and transparent standard set of KYC data and documents as

agreed & endorsed by the industry working group

Category I – Identification of the customer

Licenses and Proof of Regulation, Certificate of Incorporation etc

Category II – Ownership and management structure

Declaration of UBO, Board of Directors Lists, AA/MA and company

Shareholdings and structure, stock exchange information,

Category III – Type of business and client base

Category IV – Compliance information

Key Compliance contact information, AML documentation, AML P& P,

Wolfsberg Questionnaire, USA Patriot Act, Other Compliance Docs

Category V – Tax Information

Tax ID information, FATCA information, documentation and contact

information.

• Transparency about what is and isn’t validated Fact-based checks*:

– Completeness and accuracy of the information

– Validity

– Format of document and the translated version

• Coherence checks between documents

• No judgmental or subjective checks (e.g. veracity of AML-related questions)

→ SWIFT publishes the information only if qualification requirements

are met

• Validation of

– Data against supporting documents

– Documents against public sources (where possible)

• Validation undertaken by industry professionals who understand the context & are

language proficient

Thorough and evidence-based data validation

so you can rely on the data you consume

Portfolio Management to help you track

your own institution’s data and those of

your counterparties

Task Management to help you track

content access requests, update

requests

Sharing settings so you control who can

and cannot access your data

Group upload options to auto-populate

multiple entities with identical docs

Access through web portal so no IT

integration or customisation required.

The KYC Registry platform: rich in features to save

time and cost in managing your KYC data…

Upload, update, manage, share and

collect your KYC data in a single place

Unique added-value: the SWIFT Profile

• An optional service

• Based on FIN traffic

aggregated information

• Owned and managed by the

bank

• With different levels of

granularity

• Shared through the KYC

Registry

8

YOUR

CUSTOMER

YOUR

CUSTOMER’S

CUSTOMERS

YOU

“AM I EXPOSED

THROUGH MY

CUSTOMER’S

CUSTOMERS?”

“HOW DO I

SUBSTANTIATE MY

DECLARED

BEHAVIOUR?”

KYC Registry17 Aug 2015

897 entities

in 145 countries

16

Community lead engagement

Financial community of Dominican Republic joins

SWIFT’s KYC Registry

For Immediate Release

Financial community of Dominican Republic joins SWIFT’s KYC

Registry

New York, 5 May – SWIFT today announces that the Dominican Republic is

the first country to implement the KYC Registry as a financial community.

Nearly all member banks of the Dominican Republic SWIFT user community

have now become registered users of The KYC Registry.

Says Fabiola Herrera, Director, Payments and Systems, at the Central Bank of

the Dominican Republic, “Banks who engage in correspondent relationships

require a range of information and documents about their counterparties in

order to achieve effective due diligence programs and meet other regulatory

requirements. Adopting the SWIFT central KYC utility as a whole

community means that banks in the Dominican Republic will raise their

levels of compliance with applicable anti-money laundering standards. It

also allows us to strengthen the mechanisms for preventing and mitigating

risks associated with crimes of a financial nature in the Dominican Republic.”

Itaú BBA to join SWIFT’s KYC Registry to help address growing

compliance challenges.

Members of the Banking Association of Bolivia to join KYC

Registry

The KYC Registry will be instrumental in reducing the

administrative burden associated to KYC. Cu Anh Tuan, CEO of

An Binh Bank,Vietnam.

With The KYC Registry, our time is used on risk analysis and not

on data collection”, Luca Piccione, KYC Registry project

manager at UniCredit

“In order to have better KYC, we all need to work together. The

more organisations that join, the more benefits for all”. David

Fleet, Managing Director, Client Due Diligence and Middle

Office at Standard Chartered Bank”.

www.swift.c

om

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KYC – Bancos Corresponsales

Liliana Alvis – Oficial de Cumplimiento Banco Davivienda

Evaluación de Bancos Corresponsales

Evaluación Bancos Corresponsales Directos e Indirectos

Vinculación y Revisión Anual

Cuestionario AML Composición accionaria Políticas AML US Patriot Act Licencia de operación Riesgo Jurisdicción

Análisis Clasificaci

ón

Línea de Negocio Áreas de Operaciones Cumplimiento

Solicitud de Aclaraciones

Toma de decisión

Evaluación Bancos Corresponsales Directos e Indirectos

Acompañamiento y Monitoreo

Integración Regional- KYC Ámbito regulatorio

Conocimiento del Cliente (AML/ KYC)

Manual de Prevención Anti-lavado de dinero División de Cumplimiento (Organigrama)

Auditorias

Programas de Capacitación

Evaluación de Riesgo

Políticas aplicables a PEPs

Servicios de corresponsalía Bancaria

Proceso de monitoreo transaccional

Reporte de transacciones Sospechosas Sistema de monitoreo de Embargos y Sanciones

Países de Alto Riesgo

Honduras

Panamá

Costa Rica

Salvador

Miami

Casa Matriz

Información atendida

Evolución y retos KYC

Escenarios actuales

Los requisitos, las normas , las sanciones y multas, aplicación de modelos mas complejos, información que se multiplica de manera ineficiente, conceptos no unificados

La Administración

del Riesgo

Buenas practicas de Administración del riesgo

La Administración del Riesgo, con eficiencia Operativa, reducción costos, consistencia y veracidad de la información.

Fact

ore

s A

dve

rso

s a

la

Ad

min

istr

ació

n d

el r

iesg

o

KYC / Conocimiento del Cliente y de su Cliente

La diversidad de negocios que impulsan el desarrollo económico mundial exigen el conocimiento de quienes intervienen en las operaciones, sus ordenantes – beneficiarios e intermediarios, con el fin de dar cumplimiento a exigencias legales y la transparencia.

Evolución del Sistema en conocimiento del cliente

Conocimiento empírico, Leve y sin formalidad

Conocimiento de Intermediarios, del Cliente y de las operaciones a través de requisitos y documentación, carga operativa con alta disposición de recursos tecnológicos y humanos

Conceptos de optimización eficiencia y cooperación

Exigencias para el Cambio

El aumento de las presiones

regulatorias y de mercado.

Las proyecciones de crecimiento del

sector, la dinámica, el entorno de los

negocios y los riesgos latentes de

materialización.

Los modelos de administración de

riesgo complejos y sistémicos.

Las comunicaciones basadas en la

web

Complejidad entre confidencialidad e

información del cliente

Confiabilidad y Seguridad

Eficiencia en comunicaciones

De consulta oportuna y actualizada

Control de acceso

Aplicación eficiente

Eficiencia

Estandarización Información

Identificación de los

Bancos

Propiedad y Estructura

Tipo de Negocio y Clientes

Información de

Cumplimiento

FATCA

Global Transaction Banking Deutsche Bank

Global Transaction Banking Deutsche Bank

Deutsche Bank supports the SWIFT KYC Registry

Know Your Client at Deutsche Bank

Global Transaction Banking Deutsche Bank

Know Your Client: Why is KYC important ?

28

KYC is resource and work intensive. However, it

prevents from losing money and protects an entity's

reputation.

KYC utilities may support business development and

help to increase efficiency and improve documentation

as well as data quality.

“Our reputation is one of our most important assets. […] No transaction is worth risking

Deutsche Bank’s reputation.” Code of Business Conduct and Ethics for Deutsche Bank Group

Global Transaction Banking Deutsche Bank

Today’s market: An increasing challenge to comply with KYC requirements

29

KYC

Utility

Increase in pressure to

reconcile & ‘de-risk’

Increase in AML/KYC

fines (>$3 billion/2

years)

Increase in KYC

complexity:

FATF/FATCA

The Cost of FI KYC is becoming prohibitive

Repetitive and

inefficient

bilateral

exchanges

Complex and

inconsistent

requirements across

jurisdictions

Unavailability of

information

As a result the industry has witnessed a new development:

the growth of the KYC ‘utility’

Development of

requirements to follow

risk based approach

Business

delays

Global Transaction Banking Deutsche Bank

KYC Utility - A one-stop Information Source

30

7,000+ banks on SWIFT = 1.3M+ connections

Single standard for KYC requirements

Trusted 3rd party to validate & store data with built-in

access and entitlements

Unique content: SWIFT Profile, EDD data

Deutsche Bank supports the SWIFT KYC Registry

Bank

A

Bank

B

Bank

D

Bank

C

Bank

E

“One stop” provision of documentation to

utility, not separate provision to each bank

Consistency of approach across different

jurisdictions and regulatory environments

for a globally harmonised approach

leaving room for local additional

requirements

Banks can focus on managing their

financial crime risk rather than on the

effort of gaining the relevant

documentation

Banks can concentrate on up-skilling the

internal risk based decision making

process without the expense of

maintaining significant administrative

functions

Faster onboarding / review times

Single source of directly sourced,

validated KYC data for correspondent

banking

Global Transaction Banking Deutsche Bank

Why Deutsche Bank uses the SWIFT KYC Registry

31

Collaborative platform

Comprehensive set of data and documents Continuously validated content

Facilitate efficiency and transparency, as teams will

have access to the same standardised data

Designed to satisfy the stricter regulatory requirements

Central repository to access up-to-date KYC information

of Financial Institutions

Fact-based, documented and transparent controls

Banks submit, maintain and selectively exchange data through the platform

SWIFT will host and manage the KYC Registry and validate key aspects of the data

Member banks retain ownership of and responsibility for their own information

SWIFT has no involvement in any type of judgmental activities such as due diligence,

screening, risk scoring or recommendations about the closure of business relationships

Global Transaction Banking Deutsche Bank

Disclaimer

This presentation is for information purposes only and is designed to serve as a general overview regarding the

services of Deutsche Bank AG, any of its branches and affiliates. The general description in this presentation

relates to services offered by the Global Transaction Banking of Deutsche Bank AG, any of its branches and

affiliates to customers as of October 2015, which may be subject to change in the future. This presentation and

the general description of the services are in their nature only illustrative, do neither explicitly nor implicitly make

an offer and therefore do not contain or cannot result in any contractual or non-contractual obligation or liability

of Deutsche Bank AG, any of its branches or affiliates.

Deutsche Bank AG is authorised under German Banking Law (competent authority: German Banking

Supervision Authority (BaFin)) and, in the United Kingdom, by the Prudential Regulation Authority. It is subject to

supervision by the European Central Bank and by BaFin, Germany’s Federal Financial Supervisory Authority,

and is subject to limited regulation in the United Kingdom by the Prudential Regulation Authority and Financial

Conduct Authority. Details about the extent of our authorisation and regulation by the Prudential Regulation

Authority and regulation by the Financial Conduct Authority are available on request.

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All rights reserved.