Nordic banks pool resources to centralize KYC checks

The six major banks of the Nordic region are joining forces to set up a customer checking center to centralize KYC process (Know-Your-Customer) and fight money laundering more effectively.

This comes after a money laundering scandal involving both Swedbank and Danske Bank and more particularly their businesses in the Baltic. To rectify their shortcomings, the banks have planned a joint venture with Handelsbanken, Nordea, SEB and DNB to perform common KYC checks.

The banks have never worked together previously, but the international nature of money laundering and the difficulties preventing it has persuaded them to join forces. The new entity is expected to create a standardized KYC process for large and midsize Nordic corporate customers across the six banks.

The concept of these utilities is relatively new and only a handful exists. Banking secrecy laws prevent banks from disclosing suspicious clients to each other and this has hindered the fight against financial crime, a paper published last September by independent consultancy the Tax Justice Network said. Moreover, these types of ventures do not always succeed, with Singapore’s Monetary Authority (MAS) having shelved its KYC utility citing unexpectedly high costs.

But the Nordic banks’ venture is looking to go a bit further. They are looking at setting up a common “onboarding” process for the six banks. This would allow any of the banks to use the utility to assess whether to take on a customer.

The fight against money laundering is paramount to protect the integrity of the financial industry, and maintaining thorough policies and procedures in your company enable you to do that. Argus can help you appropriately detect, deter and prevent money laundering, associated predicate offences and terrorism financing; and set up with you the relevant compliance procedures for your business.

Date: 13th May 2019

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