Hermes Bank at SIBOS2017: Comply with International AML/KYC Treaties or Be Derisked
With not only separate banks but the whole regions being cut-off from international correspondent banking network, with a specific term being fast adopted by regulators, central banks, and market participants big and small, de-risking is considered to be a tool of last resort, not only it weeds out the crooks and criminals, but also makes living hard for ordinary folks—this was a general stance on many workshops and public discussions on SIBOS 2017, where de-risking as well as associated KYC/AML issues were discussed extensively.
Hermes Bank took part in one of the most interesting workshops, chaired by Mrs. Zsuzsana Degia, KYC Product Manager SWIFT, that had representatives of the Caribbean banking community discussing current situation with each other as well as with one of the correspondent banking giants—BNY Mellon.
This meeting is a very good illustration of the actual state of things in correspondent banking and if to list just a few takeaways from the BNY Mellon representative speech:
- To be a part of correspondent banking community local Caribbean banks should invest heavily in AML/KYC, both on policy and procedures level, but also on the level of Human Resources, and, definitely, into IT systems.
- Properly set-up AML/KYC regime is an expensive and time-consuming mechanism, that requires proper support. The idea is not to make a one-time investment, but be ready at any moment to demonstrate that the bank is, indeed, applying the drafted policies, screens its client-base and their transactions, including their partners (KYCC), in a fully transparent and continuous manner.
- Scale of business is important, volume is important: correspondent bank should be interested in your business. Even if you are super-transparent and do everything by the book in terms of AML/KYC policies, but have a low volume of transactions—it will be hard to on-board a large correspondent bank in any major jurisdiction: low transaction volume, coupled with high per-transaction costs make this business economically unfeasible for correspondent banks.
While some of SWIFT budding technologies may help to address AML/KYC concerns of correspondents, and, specifically, keep clients, contracts and all other transaction relevant data references tied to a transfer, making transfer a “straight-through” process, current situation is such, that only “only 36% of banks can achieve STP levels greater than 75%”. The rest is processed manually, or semi-manually, often—returned to the originating party.
BNY Mellon representative, Mr Dino Sani , was very positive about Hermes Bank plans to establish a pan-Carribean corresponding banking hub, that would take upon itself to create and support corresponding banking relationships with banks in United States, Canada, Europe and Asia, as well as to perform required AML/KYC international transaction pre-vetting.
After discussing this initiative in A New Dawn, first ever joint Russia/Eurasia – Caribbean Forum taking place in Grenada, Hermes Bank will make further announcements and call for discussion of the initiative on Carribean Association of Banks (CAB) meeting, for further discussions with other CAB members.
“Hermes Bank is very well positioned to provide both technological and procedural support to the cause”, mentioned Mrs Jeanelle Williams, Hermes Bank Deputy GM.
Hermes Bank Limited
1 Bella Rosa Road,
BW Box 332, Gros Islet
Saint Lucia, W.I.
Tel: +1 758 451 2265
Tel: +44 121 740 0128
Fax: +44 131 464 0321