Six major banks in the Nordics have reportedly come together to improve customer checking and tackle money laundering.
Danske Bank, Swedbank, Handelsbanken, Nordea, SEB, and DNB have formed the KYC Utility, which will look to restore strength in the financial industry, according to a report from Reuters. The joint venture will look to perform common customer checks in order to step-up their KYC checks.
The new body is believed to be working on a standardised KYC process for large and mid-sized Nordic corporate customers across the six banks, the article claims. This will likely be implemented from 2020 and could also be sold to other banks.
It is unclear how much capital the banks are putting into their group project.
This move has likely come on the back of turbulent trust within the financial ecosystem over recent months, following big money laundering scandals from Danske Bank. Last year, Danske Bank Estonia was found to have illicitly transferred around €200bn in funds to Russia and other ex-soviet states.
Since then, there have been numerous courses of action to reprimand and prevent this colossal laundering scandal from happening again. Following the scandal, Denmark’s government was reportedly looking to separate the close ties its regulator has with local banks, according to the Financial Times.
Earlier in the year, the European Banking Authority (EBA) opened an investigation into a breach of Union law by the Estonian Financial Services Authority and the Danish Financial Services Authority. An investigation was sparked after requests were made to explore whether the Danske Bank scandal were able to flourish due to failures by the Estonian or Danish authorities’ compliance with Union Law.
Additionally, the European Commission is looking at strengthen the fight against money laundering by giving the EBA more powers. This includes the ability to request national anti-money laundering supervisors to investigate potential material breaches and to request them to consider targeted actions – such as sanctions.
Germany’s financial regulator has also been involved with the measures. The regulator recently expanded its mandate on Deutsche Bank, which allegedly acted as a correspondent for Danske Bank in the scandal. This mandate was deployed to prevent money laundering and terrorist financing by requiring the bank to review its group-wide risk management processes around banking.
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