Due Diligence Registry Is Proposed

An international registry for due diligence documents would cut red tape out of anti-terrorism compliance, according to an industry expert.

Martin Steinbach, managing director and sector head, global services, at UBS AG, Switzerland, said that an international registry would "act as an actual repository for those documents from each bank that are needed for due diligence." The system would allow financial institutions to add documents in electronic form.

Steinbach spoke at the BAFT Midwinter Strategic Issues Conference in January. He is a member of the Wolfsberg Group, a global anti-money-laundering organization comprising several leading international financial institutions.

Enhanced due diligence, or EDD, has become a requirement in international banking under the USA PATRIOT Act and its counterparts in other nations. For each account, banks must delve into questions of ownership, involvement of politically-exposed persons and downstream correspondent clearing.

Furthermore, it's not just a one-time effort, but an ongoing requirement to stay current about customer activity.

However, the information required to satisfy regulators resides at several banks. Therefore, an institution conducting EDD has to chase down numerous documents from numerous parties in different time zones.

An international registry would relieve banks of this headache. "This solution would help ease the administrative burden on all of the banks," said Steinbach. "I'm convinced it's the only way to handle due diligence in a manageable fashion."

S.W.I.F.T., an inter-bank communications network, was suggested as part of the possible infrastructure for the proposed international registry.