A joint know-your-customer (KYC) utility for the Nordic region, which began development last year, is one step closer to becoming a reality after receiving the green light from the European Commission.

Nordic KYC Utility aims to combat financial crime and cut compliance costs in the region by creating a platform with standardised processes for handling KYC data. Its original founders, DNB Bank, Danske Bank, Nordea, Handelsbanken and SEB, have now been joined by Swedbank. After gaining approvals in accordance with EU merger control rules, the group last Friday established a joint venture company, which is now preparing for its first commercial launch in 2020.

While the six banks are investing an equal share in the company, the company is autonomous and will initially offer KYC services to the market on large and medium-sized companies based in the Nordic region.

Initially, the platform was tipped to launch at the end of 2018, however the group has spent extra time ironing out differences around compliant KYC information as well as exploring alternatives for a future digital solution. “The key lesson learned is that this is not something that is easily done. It takes some time and you also need a lot of trust between the parties. Getting to the point where there is a common standard on non-competitive data is crucial, because then you can realise actual values for all parties involved,” Fredrik Millde, interim CEO of Nordic KYC Utility, tells GTR.

Unlike Swift’s KYC registry, which aims to streamline the exchange of KYC information around the world, the Nordic KYC Utility has a more regional focus, as Millde explains. “The difference is that this is based on a common standard agreed by the major financial institutions in the Nordic region. It is based on their common view of what data needs to be gathered and how that data needs to be validated.”

In terms of fees, Millde says that the service will be free of charge for corporates wanting to do business in the Nordic region, with financial institutions paying to access the data. “We are opening this up from the very beginning to everyone that is regulated to use data. It is accessible for everyone, and there is no benefit for the founding banks in that perspective other than the fact that they are major players in the market and will see more positive customer journeys for their customers,” he adds.

Nordic KYC Utility is just the latest regional KYC platform to spring up, as financial institutions around the world scramble to deal with the rising compliance burden. According to Thomson Reuters, some major financial institutions spend as much as US$500mn annually on KYC and customer due diligence. Last July saw the launch of Afreximbank’s Mansa, which seeks to provide a single source of primary data required for banks to conduct checks on counterparties in Africa. Meanwhile, in December, five French banks and 21 firms, together with blockchain firm R3, completed a fourth trial of the CordaKYC blockchain application for sharing KYC data.