Basel Committee issues consultative document on consolidated KYC risk management

20 August 2003

Press release

The Basel Committee on Banking Supervision today issued a consultative paper that provides banks with practical guidance on managing their "know-your-customer" (KYC) risks on a consolidated basis. This can now be accessed on the BIS website at www.bis.org.

Consolidated KYC risk management is a supplement to the Basel Committee's Customer due diligence for banks issued in October 2001. It examines the critical elements for effective management of KYC policies and procedures in banks' foreign branches and subsidiaries. Mr Jaime Caruana, Chairman of the Basel Committee, noted that "Sound KYC policies and procedures need to be implemented on a global basis. They not only contribute to a bank's overall safety and soundness, they protect the integrity of the banking system by reducing the likelihood of banks becoming vehicles for money laundering, terrorist financing and other unlawful activities."

The paper addresses the need for banks to apply the four elements necessary for a sound KYC programme to both the parent bank or head office and all its branches and subsidiaries. These elements consist of customer acceptance policies, customer identification, on-going monitoring of higher risk accounts and risk management.

Comments on issues outlined in this paper are invited and should be submitted to relevant national supervisory authorities and central banks. Comments may also be sent to the Secretariat of the Basel Committee on Banking Supervision at the Bank for International Settlements, CH-4002 Basel, Switzerland by 30 October 2003. Comments may be submitted via e-mail to baselcommittee@bis.org or by fax to +41 61 280 9100.

Notes for editors

Basel Committee on Banking Supervision

The Basel Committee on Banking Supervision was established by the central bank Governors of the Group of Ten countries in 1975. It consists of senior representatives from banking supervisory authorities and the central banks of Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom and the United States and is currently chaired by Mr Jaime Caruana, Governor of the Bank of Spain. The Committee usually meets at the Bank for International Settlements (BIS) in Basel, where its permanent Secretariat is located.

Cross-border Banking Group

The working group that developed this paper is responsible for monitoring the efficiency of arrangements for supervising international banking groups and their cross-border establishments. The group is chaired by Messrs Charles Freeland, Deputy Secretary General of the Basel Committee, and Colin Powell, Chairman of the Offshore Group of Banking Supervisors and of the Jersey Financial Services Commission.

Where can I obtain the full paper?

The text of the paper is available on the BIS website (www.bis.org) as from 11.00 CET on 20 August 2003. It can also be obtained from the Basel Committee's Secretariat at the BIS by e-mailing publications@bis.org.