A community issue calling for a community solution … Financial crime is top of the agenda for banks All geographies / All types of players impacted Significant costs at stake…. ... Yet no competitive advantage for banks Lots of duplication… for universal challenges

SWIFT Financial Crime Compliance Roadmap Live Development Qualification Exploration Standards Sanctions list management service Data repositories KYC Registry Traffic analysis Compliance Analytics FATF 16 information quality Quality assurance Sanctions Testing (testing / tuning of transaction & client systems) AML testing & tuning Processing services Client/Name screening Sanctions Screening Traffic Restriction (RMA) Sanctions KYC AML

The KYC Registry Eirini Fotiou www.betterkyc.com What will we present? A short summary of the relationship SWIFT has with you An overview of KYC challenges for financial institutions An introduction to the SWIFT KYC Registry What are the meeting objectives? Discuss and understand the current KYC challenge Agree next steps and roles

NON compliance can be very costly – can you afford this?

Comprehensive KYC: The foundation to an effective AML approach Market pressure calls for increased KYC processes: No global standard requirements The industry as a whole must accept new expectations and consequences of non-compliance All banks require the same data, but there is no consistency in KYC data collection and quality assurance common to the industry

Today’s market: An unprecedented challenge to comply with KYC requirements The Cost of FI KYC is becoming prohibitive Complex and inconsistent requirements across jurisdictions Unavailability and poor quality of information Cumbersome, repetitive and time consuming bilateral exchanges KYC Utility Increase in regulations Increase in AML/KYC fines (>$3 billion/2 years) Increase in KYC complexity: FATF/FATCA As a result the industry has witnessed a new development: the growth of the KYC ‘utility’ Pain point: chasing the documents from different sources – spending too much time on that. 1. They might say yes and miss something because they don’t have time to collect everything and be cautious. 2. If they don’t have time to do the assessment properly, they say ‘no’ because they re scared and reject potential counterparties: bad for business.

The KYC Registry by SWIFT: Single source to collect and share your KYC data for CB Unique Positioning for SWIFT Single standard for KYC requirements, controlled access Trusted 3rd party to validate & store data with built-in access and entitlements Unique content: SWIFT Profile, EDD data Clearly today, banks are facing an unprecedented challenge to comply with KYC legal requirements  SWIFT value proposition Global: Reach more than 7,000 banks active in correspondent banking, representing more than 1 million relationships Industry-owned: well established, neutral partner renowned for driving standardised, industry-wide solutions Benefits for the community: Standardisation: Reduce complexity through a default set of data and documents covering all juristictions and enhanced reporting capabilities Efficiency: Create synergies, provide the information once and collect information from a single source Effectiveness: Create more transparency through guaranteed data quality and value-added information

The KYC Registry: Stronger together as a Community

The founding principles of the KYC Registry Input your data only once (reduce the repetition of sharing your data with each of your correspondents) Global standardised KYC data baseline to reduce complexity (includes EDD data) Collaborative feature-rich platform (notifications, communication flow, access based) Validated data you can trust (SWIFT checks their completeness, accuracy & validity before putting them in the platform & on a standard basis) Unique value added - SWIFT Profile (Business Intelligence insights based or your traffic to show direct and indirect exposure to high risk jurisdictions – KYCC) Community-led initiative THESE ARE THE PRINCIPLES THAT WE FOUNDED & SUPPORTED BY THE WORKING GROUP BANKS

The KYC Registry – Baseline (1/2) Entity header and details Anglicised legal name Trading name / Doing Business As Registered address and country Operating address and country BIC and LEI Type of entity (Head-office, subsidiary, branch) Entity classification (Bank/Cooperative/Central Bank etc.) Head office: legal name, country and BIC Group parent: legal name and country CATEGORY DATA SUPPORTING DOCUMENTS I. Identification of the Customer Anglicised legal form Legal name in local language Trading name in local language Immediate previous legal name(s) Year of last legal name change Phone and fax Entity’s website Registration number Authority issuing the reg number Date of incorporation/establishment Regulatory status Primary financial regulator or supervisory authority and link to website (optional secondary) Type of licence (full / offshore) Licence number and authority issuing the licence Proof of regulation and banking licence OR Charter of law / Local decree Extract from registers OR certificate of incorporation Certificate of change of name II. Ownership and Management Structure Form of organisation: □ Privately held □ Publicly listed Name and country of primary stock exchange (optional secondary) Link to the website of the stock exchange (optional secondary) Code of the institution on the stock exchange (optional secondary) Bearer shares information Shareholding companies (companies with 10% shares or more mandatory, 5% recommended for privately held and offshore banks) Ultimate Beneficial Owners statement Ultimate Beneficial Owners (threshold 10% ownership) Key controllers (Board of Directors, Senior executive mgt, Supervisory Board, etc.) Memorandum and articles of association (statutes or by-laws) Ownership structure Documentary proof of shareholders companies Declaration of Ultimate Beneficial Owners List of shareholders Board of directors List of senior/executive management Supervisory/non-executive Board Sharia Board Latest audited annual report Functional organisational chart Proof of identity of UBOs and key controllers Proof of permanent residence of UBOs and key controllers 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. Mandatory/conditional – Enhanced DD

The KYC Registry – Baseline (2/2) CATEGORY DATA SUPPORTING DOCUMENTS III. Type of Business and Client Base Type of products and services offered Type of clients Geographical presence and reach Industry focus Evidence of type of customers IV. Compliance Information Money Laundering Reporting Officer or department contact details Chief Compliance Officer name AML person contact details Number of employees Number of AML staff Name of AML Auditors Questions about Sanction lists used by the entity PEP screening / sanctions screening / AML transaction monitoring processed used Procedures/information gathered when establishing a customer relationship Regulatory investigation or fines Wolfsberg AML questionnaire completed or equivalent Summary of AML policies/procedures or AML laws Detailed AML policies and procedures AML questionnaire of the entity (template) USA Patriot Act Certification completed MiFID questionnaire of the entity (template) Organisational chart of the Compliance department Response to negative statement from the press V. Tax Information FATCA status and classification GIIN FATCA contact details Tax Identification Number and tax country(ies) FATCA form Mandatory/conditional – Enhanced DD

SWIFT Profile in a nutshell WHAT IT IS Does your bank have direct or indirect exposure in FATF high risk or sanctioned jurisdictions? It addresses the challenge of Know Your Customer’s Customer. YOUR CORRESPONDENT COUNTRY OF YOUR CORRESPONDENT’S COUNTERPARTY YOUR CORRESPONDENT’S DIRECT EXPOSURE INDIRECT EXPOSURE PUBLISHER OF THE SWIFT PROFILE CONSUMER OF THE SWIFT PROFILE YOU COUNTRY OF ORDERING / BENEFICIARY PARTY’S BANK KEY BENEFITS Provides unique insights into bank’s activity, to identify correspondents located in high risk or sanctioned jurisdictions Based on unique factual data Substantiates the declared behaviour & increase your credibility Promotes a pro-active approach & improve your risk assessment Allows focusing the dialogue with your correspondent on highest risk areas

SWIFT Profile: insights on KYCC e.g. “Algeria accounts for more than 30% of Bank’s A total exposure in USD” e.g. “Bank A has been exposed to Iran through Bank XYZ in Germany” e.g. “Between 5 and 15% of Bank’ As inbound traffic in USD is received from counterparties located in OFAC sanctioned jurisdictions” SCOPE DATA Transparency Accurate risk assessment

Our Approach SWIFT has partnered with Institutions to: Evaluate the service and discuss future evolutions (frequent consultations) Define high risk priority countries Build a promotional action plan Q2 2015: Executing the plan… For them and with them (joint events, roadshows, customer testimonials, …) German bank: Working with the WG banks: Internal presentation of The KYC Registry to DB’s FI client Sales force Helping the get organized internally (best practice from other banks) Letter or email of introduction of the KYC Registry to their correspondents Events organized with them to promote the Registry to their FIs various events in different locations to their FI clients

How managing entities at group level can benefit institutions Global Head Office Local Head Office Centralize, smoothen and control your KYC activities Greater visibility & facilitated global audit trail Ability to link docs across the group (or have entities covered by HQ) Benefit at a local level Complete local data only Ease the reporting to HQ

30 Mar 2015 316 entities 106 countries EMEA: 238 AM: 67 AP: 11

The Benefits Reduced complexity Greater transparency Saves time and money 17

Why should banks join the KYC Registry (now) They share their KYC data at no cost They only pay for the data they need They benefit from our 2015 launch offering KYC Registry members will get free access to the KYC Registry in 2015* provided that by end of 2015, they have - properly contributed with their data to at least 50% (or minimum 20) of their entities, and - at least 30% (or minimum 500) of their counterparties documented on the KYC Registry Working Group banks get 6 months for free by default and must meet 1 one of either conditions

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