Joachim von Haenisch, CEO of KYC-Exchange


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The challenges of KYC

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Joachim von Haenisch, CEO of KYC-Exchange

  1. 1. Setting the Standard as the first secure communication platform for Know Your Customer (KYC) and Customer Due Diligence (CDD) purposes for the Financial Industry.
  2. 2. Data Collection - Case Study(1) Cash Management Service Provider (a top 50 bank) • Needs to KYC 1,000 (medium to high risk) cash management clients per year • Requires detailed KYC questionnaire from all clients • Collects client information via public sources and sends KYC questionnaire to all clients • Average turn around time for new client is 34 days • Average turn around time for existing client is 70 days • Average time spent for collecting data (search and chase) is five hours • Responses received by Email with non- standard PDF attachment • Manual input of data required (1 hour) • Total time spent: 6,000 hours 2Confidential – © KYC Exchange Net AG 2014 Client Bank (a smaller bank that requires Cash Management services) • Receives 100 KYC data requests per year • KYC Data requests include requirement to fill a KYC questionnaire • 4-8 hours to fill each questionnaire • One hour per request to collect other documents, draft and send response • Total time spent: 500-900 hours 100 banks have a relationship  100 banks process 99 client KYC’s = 9.900 incoming KYC’s  100 banks respond to 99 KYC requests = 9.900 outgoing KYC’s
  3. 3. Bank A 1. Approaches Client 4. Receives KYC data 1. Receives Bank A’s request for own KYC data 2. Checks validity of own KYC data and updates data if required 3. Releases own KYC data to Bank A via KYC Exchange Net Other Client Relationship Banks: Receive notification if Client Bank updates KYC data in Step 2 Client Bank’s KYC Standard Questionnaire & other Documents SaaS of KYC data and relationships: Bank A Relationship Banks Initiator Bank: SaaS / Web-Portal Client Bank: 1 2 3 4 5 Storage as a service (SaaS) KYC Exchange Net enables Client Banks to store their KYC data online (SaaS). The KYC data remains fully owned by the Client Bank and is shared with business partners (Initiator Banks) on request. Any update of previously shared data is communicated to all previous recipients in real time (living KYC). No ‘task’ on the platform takes more than four clicks and all (with the exception of filling the KYC Standard Questionnaire) can be performed, on average, in under one minute. Confidential – © KYC Exchange Net AG 2014 3
  4. 4. Content (1) KYC Standard Questionnaire All banks that are using KYC Exchange Net are required to complete an extensive KYC Standard Questionnaire The Questionnaire follows a best-practice approach and addresses AML/CFT recommendations published by: • FFIEC BSA/AML Examination Manual • The New York Clearing House Association Guidelines for Counter Money Laundering Policies and Procedures in Correspondent Banking • UK Money Laundering Regulations 2007 • Relevant chapters of the Joint Money Laundering Steering Group Guidance Notes • Relevant FCA/FSA pronouncements on financial crime, primarily the ‘Banks’ management of high risk money laundering situations’ (June 2011) report The Standard Questionnaire will be updated frequently to reflect changes in best-practice 4Confidential – © KYC Exchange Net AG 2014 KYC Supporting Documents • Commercial Register or similar document which confirms that the Institution is registered • Proof of ownership or applicable listing evidence from a recognised stock exchange • Ownership chart/structure • Banking License or current proof of regulation • Proof of Registration Number with local regulator(s) or membership of regulatory body or bodies • Articles of Association or similar documents • VAT or VAT-equivalent certificate • Internal organisation chart/structure • List of internal audit reports and dates • Latest Audited Annual Report • Latest Annual Report of ultimate beneficial owner • Biographies of at least three Members of the Board • USA PATRIOT Act Certification • List of the Institution's correspondent banking relationships for each currency • Optional: The Institution's list of authorised signatures
  5. 5. Content (2) Administrative information Allows to match static client data against own records and to understand the client’s business and customers Confidential – © KYC Exchange Net AG 2014 5 Evaluative information Allows to analyse the client’s AML/ CFT policies, the regulatory environment and internal controls for risk assessment purposes
  6. 6. Supports: Risk Based Approach • Dynamic Questionnaire displays relevant questions only – depending on previous answers  Questions 1.1-1.3 are only visible if question 1 is answered “no”  Question 1.3 allows to add an unlimited number of subsidiaries via “+” function • Context related help-information is available  were needed: Confidential – © KYC Exchange Net AG 2014 6
  7. 7. Data Collection: Case Study(2) Cash Management Service Provider (a top 50 bank) • Needs to KYC 1,000 (medium to high risk) cash management clients per year • Request of KYC Data via KEN: Two minutes per client • Average turn around time for client new to the platform: ~35 days • Average turn around time for client already on the platform: “One Click” by the client • All responses arrive in the same electronic format • Less manual input of data required (0.5 hrs) • Automatic updates if data changes -> supports trigger review event monitoring • Total time spent: ~550 hours (down from 6,000 hours) 7Confidential – © KYC Exchange Net AG 2014 Client Bank (a smaller bank that requires Cash Management services) • Fills KYC Questionnaire online (16 hrs p.a.) • Uploads all supporting documents (1 hr p.a.) • Frequently updates questionnaire (6 hrs p.a.) • Release of KYC Data on request: One minute • Sending KYC data to any other business partner: Two minutes • Total time spent on 100 KYCs: ~25 hours (down from 600-900 hours) 100 banks have a relationship  100 banks process 99 client KYC’s = 9.900 incoming KYC’s  100 banks upload their KYC data = 100 ‘outgoing’ KYC’s (down from 9.900)
  8. 8. Contact Marcel Krist Managing Director and CEO Zurich Office: +41 44 567 61 57 Hans-Joachim von Hänisch Managing Director, Head of Product Development and Sales UK Office: +44 1483 338 585 Headoffice Hotelstrasse (Postfach 311) CH-8058 Zurich 8Confidential – © KYC Exchange Net AG 2014
  9. 9. Confidentiality - Disclaimer Document Confidentiality Statement The information in this presentation and the conceptual approach to manage a Standard Questionnaire via KYC Exchange Net AG as included in this document is confidential to the person(s) to whom it is addressed and should not be disclosed to any other person or party. It may not be reproduced in whole, or in part, nor may any of the information contained therein be disclosed without the prior consent of KYC Exchange Net AG. A recipient may not solicit, directly or indirectly (whether through an agent or otherwise) the participation of another institution or person without the prior approval of KYC Exchange Net AG. Any form of reproduction, dissemination, copying, disclosure, modification, distribution and or publication of this material is strictly prohibited. Confidential – © KYC Exchange Net AG 2014 9