Corporate KYC Passports – A New Dawn Facilitating Faster Financing for SMEs

Anthony Wadsworth-Hill, Mercore


“Momentum is building. As more parties see the advantages, adoption is accelerating”


The Friction of Regulations and Finance

While the global trade finance gap – estimated in the trillions – often dominates discussion, less attention is paid to the hurdles that so-called ‘successful’ SMEs face when they do secure financing. The process is far from simple or fast. Even for SMEs that obtain credit, the cost of compliance remains a major barrier, highlighting the need for more efficient mechanisms to help close the finance gap.

A major challenge is regulatory compliance. Financial institutions operate in an environment where the burden of anti-money laundering (AML), counter-terrorist financing (CTF), and sanctions monitoring continues to grow. Despite recent UK government rhetoric about relaxing regulations to promote growth, compliance-related requirements have not eased. SMEs experience this as frequent and intrusive checks, which delay processes and consume valuable time.

This heavy compliance load often leads institutions to make commercial decisions based not only on creditworthiness but also on the cost of onboarding and monitoring. If compliance costs outweigh potential returns, many lenders walk away – further restricting credit availability.

But it doesn’t have to be this way.

The Role of Compliance and Duplication

Lenders must collect and verify customer data to ensure they are not processing funds from illicit sources. Under laws such as the UK’s Proceeds of Crime Act, failing to do so can result in penalties. Most institutions require very similar KYC (Know Your Customer) and KYB (Know Your Business) information. With AML obligations extending into law firms, property companies, and other services, each entity often repeats the same data collection – resulting in duplicated effort, high costs, and endless requests.

This inefficiency wastes time and resources for both institutions and SMEs, who must repeatedly submit the same documentation across multiple relationships.

Corporate KYC Passports – A Logical Next Step

The solution… a “corporate KYC passport” that could act as a secure, single source of truth – housing business information such as KYC/KYB details, directors’ identity checks, source of wealth and funds data, and authorised signatories, together with their verification sources.

Crucially, the business would own and control its data and choose who can access it. Instead of maintaining multiple files and responding to repeated requests, SMEs would only need to keep one profile up to date. Financial institutions, in turn, would receive comprehensive, standardised compliance packages – dramatically accelerating onboarding and reducing their compliance costs.

Faster onboarding reduces operational drag. Lower costs make it more viable to support a wider range of SME clients. This could make a real dent in the trade finance gap.

Barriers to Adoption

While the concept is simple and sensible, implementation has been slow. Financial institutions often rely on outdated IT systems ill-equipped to handle innovation. Many of these legacy platforms have been stretched beyond their original design, making replacement unfeasible and integration difficult.

Another challenge is liability: institutions remain legally responsible for verifying customer data, so there’s reluctance to rely on third-party sources – however well-designed.

A Tipping Point Approaches

Despite these obstacles, change is on the horizon. The unrelenting tide of AML regulation means the current system is nearing a breaking point. A more practical model is emerging: corporate KYC passport solution that doesn’t require software replacement or complex integration. Instead, institutions can access the data and conduct internal checks, drastically reducing customer touchpoints without sacrificing regulatory standards.

This approach addresses concerns around risk and control while maintaining compliance. Regulators acknowledge the commercial challenges but have yet to offer a solution, therefore innovation from within private sector is needed to drive the change.

Mercore’s Approach

This is where Mercore steps in. The company has built a user-friendly onboarding solution designed to facilitate adoption of corporate KYC passports. The solution is accessible to third parties, not just Mercore itself. But Mercore is also leading by example – providing direct financing to SMEs using this model.

Importantly, the benefits aren’t limited to small businesses. Larger corporations with multiple banking relationships face even greater burdens managing compliance. Corporate KYC passports are a scalable, size-agnostic solution that serves everyone – creating a rare win-win-win scenario for businesses, institutions, and regulators.

Corporate KYC Passports in Action

So, when will this future arrive? In truth, it’s already here. Mercore’s fastest onboarding time – from first contact to funds deployed – is just 3.2 days, a dramatic improvement over the industry norm of weeks or months.

Additionally, through deal syndication, Mercore has seen strong enthusiasm from institutions receiving ‘oven-ready’ compliance files. These institutions no longer need to start from scratch – saving time and cost while reducing friction.

Momentum is building. As more parties see the advantages, adoption is accelerating. For SMEs starved of credit, and institutions drowning in compliance costs, Mercore’s corporate KYC passport may be the breakthrough the sector has been waiting for.