Guide To KYC And AML Compliance

As technology has connected businesses and consumers across the traditional barriers of language and distance, it has created a world of unprecedented economic opportunity. But in doing so, it has also significantly increased the risk and complexity of doing business across Europe and the rest of the world.

Organisations are under growing pressure to identify, analyse and understand exactly who they’re doing business with — specifically to abate the international threat of terrorism and financial crime. This pressure manifests itself as Know Your Customer (KYC) regulation, as well as various Anti-Money Laundering (AML) directives.

You can know about KYC And AML Compliance via

While specific legislation varies from region to region, core compliance requirements are fairly uniform across the international business environment under the FATF requirements and recommendations. Any organisation that does business internationally also needs the agility and foresight to meet the KYC compliance standards of each client’s respective jurisdiction.

The 3 steps of a KYC compliance framework

1. Customer Identification

Before checking a customer’s identification documents, it’s necessary to verify their and scrutinise all available information for any inconsistencies. You need to be sure that your potential customer is not on any of the Sanction Lists (such as the OFAC or Interpol Lists).

You also want to be informed if your prospective customer is Politically Exposed, as it is deemed at international level that a PEP (Politically Exposed Person) is more susceptible to corruption, hence such customers should be considered as high risk and subject to specific mitigation measures.

2. Customer Due Diligence (CDD)

Due diligence measures should include collecting all available data on the customer from trusted sources, determining the purpose, intended nature and key beneficiaries of the relationship, as well as maintaining ongoing monitoring of the relationship to ensure all activity is consistent with recorded customer information.

3. Enhanced Due Diligence (EDD)

If the customer is deemed to be higher risk than expected, enhanced due diligence measures are required.