LONDON JPMorgan (JPM.N), Citigroup (C.N) and four more major banks have signed up with an industry group to develop a central register of information on other banks they deal with to help to meet increasing compliance demands and costs.
Swift, a Brussels-based group used by thousands of banks to exchange financial messages, said on Tuesday that six banks had agreed to develop and use the register, which will collect and share standard information required by banks as part of their due diligence processes.
Senior bankers have for some time said there is potential for banks to share information on customers to help to meet increasing "know your customer" (KYC) requirements and save money by reducing duplication of information.
Regulators require banks to have rigid KYC policies and are tightening compliance to bolster protection against money laundering and fraud.
Swift's KYC Registry will at first focus on correspondent relationships, which are the other banks they deal with in handling transactions. It was not clear whether data sharing will later extend to corporate customers or individuals.
Banks have in the past pointed to client confidentiality and security as stumbling blocks to such sharing of information, but Swift said each bank will retain ownership of its own information and control over which institutions can view the data.
JPMorgan, Citi, Bank of America Merrill Lynch (BAC.N), Commerzbank (CBKG.DE), Societe Generale (SOGN.PA) and Standard Chartered (STAN.L) have signed the agreement with Swift.
The Brussels-based organization said it expects more banks to join in the coming months.
"Having a single, centralized registry for up-to-date KYC information will reduce the time, effort and cost related to gathering, accessing and sharing KYC information," said Pascal Auge, head of global transactions and payment services at Societe Generale.
The banks will join a working group to agree processes and the documentation and information necessary to meet KYC requirements across many countries and will start putting their own data into the register, Swift said.
(Editing by David Goodman)