Anti-money laundering (AML) and Know Your Customer (KYC) compliance are growing challenges, as criminals seek to move money around the globe to hide its origins, while complex fraud can be secreted in transactions that are hard to trace or follow.
At the same time, the growth of a range of technologies, including apps, cloud platforms, remote working, and mobility, is enabling the rise of the gig economy. While this offers many advantages to workers – flexibility, the ability to match work to lifestyle or location, and so on – it is reducing many types of work to commodity status.
This, plus a growing grey area in which business and personal finances merge, has made the gig economy a prime route for money laundering, indirectly via platforms such as Uber, Lyft, Airbnb, and so on.
To help combat these problems, secure financial messaging provider SWIFT announced this week that it will now allow corporations to join its KYC Registry, in an effort to facilitate the sharing of data between companies and their banks.
The move is intended to address one of the key challenges in KYC compliance: companies’ use of multiple banks in multiple regions and regulatory jurisdictions, leading to incomplete or out-of-date audit trails of data.
“Corporate treasurers cite KYC as one of the top three challenges they face in their bank relationships,” said SWIFT’s Head of KYC Compliance Services, Marie-Charlotte Henseval.
The KYC Registry will now extend companies “the same advantages, with a standard agreed by the community and a secure platform enabling efficient data sharing”, she said.
The International Monetary Fund (IMF) estimates that some $2.1 trillion is laundered annually worldwide. As major corporate fraud becomes harder to perpetrate, criminals are looking for alternative routes that replace big targets with networks of millions of smaller ones.
But they can only do this via the cloud platforms that enable the gig and sharing economies to prosper. According to SWIFT, this is one reason why sharing information between companies, banks, and other relevant parties is becoming an essential component of KYC and AML compliance.
“In an era of constantly evolving regulation and obligations, both corporates and banks seek to simplify the maintenance process of exchanging KYC data,” said SWIFT in a statement this week.
“With data often disseminated across multiple sources, incomplete or out of date, banks have to repeatedly follow up ad update information with their corporate customers.”
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