Insight & Analysis

Managing KYC – treasury pain relief?

Published: Jul 2020

There’s no getting round Know Your Customer (KYC) processes but there are ways to handle to handle the pain, as one treasurer tells Treasury Today.

Magnifying glass, know your client

KYC is one of those processes that has to be done, and for good reason, but it can be a rather painful experience for treasurers, especially those in multi-banking environments. SWIFT has reported that the average global treasury team spends more than one day per week navigating a thicket of KYC requirements. And it’s not getting any easier.

Several utilities have come and gone (those of Bloomberg and Refinitiv spring to mind), few providers it seems are able to agree on sharing what effectively is valuable client data. And within a constantly moving regulatory space, it’s just too difficult.

Praveen Juyal, Treasury Manager, Amway India Enterprises, has first-hand experience of what KYC compliance is like from the corporate side. Whilst he accepts that KYC has a vital role to play, he says the main pain-point for him, as a treasurer, is process efficiency.

To illustrate his point, he reflects on a recent event. “I have exchanged 20 emails with one of our banks on this KYC. The bank wants the signature of the customers but I have told them many times that all are working from home, and that it’s difficult to get signatures at present, considering the situation with COVID-19, but the bank is still not satisfied.”

His ongoing frustration is palpable. “We have 15 signatories and 12 banks in our system. Every year we need to provide KYC, and it’s a pain to do it again and again for the same person. Really, how often is there a change in human behaviour and in their signatures? Do they change every year? The answer seems to be ‘yes’ since we are obliged to repeat KYC every year.”

Commercial and regulatory complexities aside, the various KYC utilities offered to date have largely failed, he believes, because the pain of responding to KYC is just not taken seriously.

Possible fix – and a workaround

One possible solution he suggests is that, unless there is a change in circumstances for the client, banks and FIs should not repeatedly ask for KYC confirmations but instead take an annual declaration that there is no change in previous KYC status. It seems simple.

Ideally, Juyal sees a digital repository with unique reference number, as the longer-term answer. “If anyone wants it, just give that reference number and you are done.” That number could operate in much the same way a Director Identification Number, but using data masking for more security.

In the meantime, he suggests other treasurers could make life easier for themselves by taking a relatively simple action. “Make at least five printouts of KYC documentation, get them signed immediately by the respective authorised signatories, and make your own ‘repository’, he suggests. “Every year, whenever necessary , just take one copy as required and provide it to your banks. That way you can save your time for five years if there is no change in signatories.”

That the process is still excruciating for most treasurers raises some key questions for Juyal. “I would like to understand if we are seriously looking for KYC, or if what we are doing is merely to comply with the requirements? Also, I’d like to know why, if there is a proper system in place to check KYC, why there are still frauds in businesses, banks or financial institutions?”

For him, the overarching purpose of KYC requests should be made clear by those that require it: “By all means ‘Know Your Customer’ but please don’t ‘Knot Your Customer’ with this pain”.

A deeper exploration of this topic will be featured in the July/August edition of Treasury Today.

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