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How Do Treasurers Describe KYC? "I Just Think That This Is Insane."

  • By Andrew Deichler
  • Published: 11/17/2016

rulesregs1LONDON -- On one side of the pond or the other, know-your-customer (KYC) compliance is a headache for corporate treasurers. During a roundtable discussion Wednesday afternoon at the Payments International conference, European corporate treasury professionals voiced their issues with the KYC process. In the opinion of one treasury executive, KYC compliance is “killing” business and banks. “We are being treated like we are crooks,” he said.

One practitioner noted that the Payments Services Directive 2 (PSD2) in Europe expands the KYC process further, which is making life for treasurers even harder. PSD2 went live this year and member states have until January 2018 to comply.

“We have 12 different banks, and we open bank accounts day to day. The amount of KYC we do is already really high, and now it’s going to be even higher,” the practitioner said. “So from a corporate treasury point of view, I just think that this is insane. The biggest problem is confidentiality; I don’t want them to have access to my bank account.”

A treasury executive for an aircraft manufacturer also voiced her frustrations with KYC and anti-money laundering (AML) compliance, particularly around the lack of cooperation from banks. “When someone pays us, we have to say, ‘This is this counterparty, with this bank account,’ and so on,” she said. “Our compliance team has to do a compliance check in order to be sure that each counterparty is compliant with regulations. This information is available at the bank, but quite often they do not provide very detailed information about our counterparties.”

A third practitioner from a trade association named KYC compliance as his organization’s top pain point, largely due to a lack of consistency around what’s being asked. “Trying to get accounts open, getting them managed is difficult; sometimes we’re asked for different information from different banks in the same country,” he said. “And we say, ‘Wait a minute, this bank’s not asking for this. Why are you asking for it?’”

That lack of consistency is a common problem, as another practitioner noted that his organization has been required to provide different information to individuals at the same bank.

The crux of the problem, the trade association treasurer believes, is that neither the banks nor the regulators understand the corporate side. “They don’t necessarily work with corporates to understand what our pain points are to make the process smoother,” he said.

The general consensus by the group is that corporate treasurers, along with associations like AFP and the Association of Corporate Treasurers (ACT) should press their banks, so that they will, in turn, work together to push back against the regulators. But while that sounds like an ideal solution, as one attendee noted, getting banks to work together on anything is a challenge.
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