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De-risking and "know your customer data"

29 Jun 2015

The fight against money laundering, tax evasion and terrorist financing has been prioritised by the international community and, amongst other things, this has resulted in increasingly stringent requirements for “know your customer” (“KYC”) checks by banks (amongst others).

However tensions have arisen as to how to strike a balance between preventing financial crime and implementing other initiatives such as financial inclusion and the support of exports  growth, investment, employment and trade.

In October 2014 the Financial Action Task Force (FATF) published a press release in which it discussed the issue of de-risking – the process by which financial institutions terminate or restrict business relationships with customers or correspondent banks in order to avoid risk and related KYC implementation issues.

The G20 is now looking at de-risking. As a result the World Bank Group is carrying out a survey to collect data from banks, money transfer operators and others on the key drivers and consequences of de-risking.

On 11 June 2015 the British Bankers Association published an article on its website (www.bba.org.uk) encouraging its members to contribute to the survey. The deadline for its completion is 30 June 2015.

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