A group of banks including JP Morgan and Citigroup have agreed to develop and use a centralised 'know your customer' register to reduce the cost of storing data for compliance purposes.
The centralised repository, run by Brussels-based firm Swift, collects and shares information to help banks determine the level of risk posed by other banks that handle transactions on behalf of corporate clients.
Bank of America Merrill Lynch, Citi, Commerzbank, JPMorgan, Societe Generale and Standard Chartered signed a memorandum of understanding (MOU) to build a service that will help them manage compliance challenges and reduce the cost of meeting KYC regulations. They will also begin to merge their own KYC data as part of the development of the utility service into "secure, centralised storage".
Banks joining the registry will be able to access information on counterparties, but will retain ownership of their information, and control over which institutions can view it.
"One of the major challenges with KYC activities is maintaining accurate information," said Pascal Aug, head of global transactions and payment services at Societe Generale. "Having a single, centralised registry for up-to-date KYC information will reduce the time, effort and cost related to gathering, accessing and sharing KYC information."
David Fleet, managing director of client due diligence, Standard Chartered, added: "This is a great opportunity for major players across the industry to collaborate towards a global solution that will benefit our clients and better manage risk."
Swift's KYC Registry is expected to go live at the end of 2014 with a controlled ramp-up planned during the summer of 2014, the firm said.
The announcement comes banks look at ways to reduce the cost and time spent meeting a growing list of regulations, JP Morgan recently highlighting a 27 percent growth in its compliance IT spend since 2011.
Sharing of data platforms has been one way for banks to ease the burden of meeting regulations. Four banks - Barclays, Credit Suisse, Goldman Sachs and JP Morgan - recently signed an MOU with post-trade services group the Depository Trust & Clearing Corporation, with the aim of creating a shared repository for client reference data.