Risk Management

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KYC Forms: The Art of Doing Differently That Which Could Be Standardised François Masquelier questions why so little has been done to standardise the process of gathering information on bank customers when the forms often involve the same data being recycled endlessly.

KYC Forms: The Art of Doing Differently That Which Could Be Standardised

KYC Forms: The Art of Doing Differently That Which Could Be Standardised

by François Masquelier, Head of Corporate Finance and Treasury, RTL Group, and Honorary Chairman of the European Association of Corporate Treasurers

This article tackles the problem of KYC forms – the process of gathering information on bank customers. It is sad that so little has been done to standardise these forms or make them consistent when most of the time they involve the same data being recycled endlessly. Surely solutions could be found that would help set up a central register of this data (banks and customers)? Where are we in terms of KYC? The banks say that this process is one of the most burdensome and costly for them, but nevertheless it is specific and unique to each bank and, even worse, to each country. The time has come to get to grips with this idea and strive to have certain solutions (or at least one) put in place to make life easier for treasurers and to make sure information can be exchanged reliably.

Knowing me, [not] knowing you

The cynics amongst us might be tempted to parody ABBA’s famous song, and change the words to “Knowing me, Not knowing you... ha-ha”.

It is increasingly dangerous to do business with people or companies that you know nothing about. Even worse, it has in many cases become completely impossible. However, as always there has been an overreaction. In trying too hard to protect people from hackers and other crooks, the procedural requirements have been raised sky high. Far too high, some say. The rules are there, but the banks still don’t know their customers. Time and time again they ask for the same information, sometimes requesting further information, even though the customer has been with them for many years. It is a never-ending story. Unfortunately, it has a high cost for the bank, and the bank has every intention of recouping that cost. It also has a high cost for the customer company, which has to grin and bear it. The KYC (Know Your Customer) concept has very appositely been described by David Blair in his blog as ‘Killing Your Customer’.

The administrative burden of complying with these KYC obligations, country by country, establishment by establishment, with disparities even within these same banks, has become excessive. It has even become an obstacle to opening bank accounts in some cases. The process is burdensome for both sides, so we cannot put the blame on the banks for doing their job. We may, however, be critical of the lack of standardisation in the process. SWIFT has indeed tried to put together a continuously updated list of documents required, country by country and bank by bank. But even this compilation of information, in spite of today’s internet access and total connectivity, seems to be impossible to achieve.

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