- Opening bank accounts
- AML consulting
- Business support
- Сompanies for sale
The importance of Know Your Client is truly undeniable for the financial sector. The control mechanism called Know Your Client (KYC) enables financial institutions to identify their client, check their financial and residency information, and then perform customer due diligence searches. Only after undergoing these procedures, the client can open an account. The main goal of KYC is to prevent money laundering and terrorist financing.
Just as many other sectors, the global pandemic became a trigger of digitalization in the field of finance, too. Nevertheless, the money laundering technics have also found new ways during the epidemic. This is why Financial Action Task Force (FATF) does not cease to emphasize the importance of Customer Due Diligence and Know Your Customer processes to stop criminal activities in the sector of finance. In addition, FATF is encouraging financial institutions to use a risk-based approach while taking those measures.
Let’s take a look at the manner of performing KYC and CCD activities advised by FATF and other financial supervisory organizations.
In modern days, conducting financial activities has become significantly easier. No one needs to wait long lines at the bank anymore. What is more, the pandemic has us locked in our homes from where we process all our payments and numerous other transactions. Nevertheless, this convenience of the digital space brings many financial risks.
Due to these reasons, all companies and businesses digitize their processes and update their digital infrastructures. Meanwhile, they should not forget about implementing anti-money laundering measures such as KYC and CDD. What is key: due diligence does not only refers to high-risk activities but also to the ones that belong to the medium and low-risk categories.
As the popular belief has it, Customer Due Diligence is only performed before the customer opens a new account. However, this process should be carried out until the point when the client disconnects from the institution.
It is important to keep in mind the current world set up though: some clients can fail to provide the requested information due to sickness or lockdown. This is when the company should offer possible measures or postponements to the client and not end the relationship with them immediately.
In May of 2020, Financial Action Task Force introduced a Money Laundering and Terrorist Financing Law. The law encouraged businesses to inspire and support their clients while using digital identity and other innovative mechanisms more. This would be helpful with identifying customers more easily when they perform transactions. Also, the law stated that reporting organizations should store digital document copies temporarily.
Do you need assistance in performing KYC or CDD measures? Do you struggle with understanding AML conditions in your legislation? Contact COREDO to go through these challenges.