One of the cornerstones of the AML/CTF Act and a reporting entity's AML/CTF program is to establish and verify the identity of its customers. The principle of 'know your customer' (or KYC as it is usually called) is not only a specific obligation under the new AML/CTF regime, but is also good business sense for a reporting entity to know who it is dealing with as the basis of a sound ongoing business relationship. Relationships that are founded on anonymity do not engender trust and openness and therefore inhibit the ability to provide the most appropriate range of products and services. Such relationships are also prone to exploitation by criminals and can damage the reputation of the organisation when financial crimes such as fraud, money laundering and terrorism financing enmesh the organisation.

Reporting entities must identify and verify the identity of a person before providing a designated service to that person. Part B of an AML/CTF program must set out your applicable customer identification procedures. For reporting entities that only provide a service covered by item 54 of table 1 in section 6 of the AML/CTF Act, the applicable customer identification procedure is to be set out in a special AML/CTF program.

Chapter 4 of the AML/CTF Rules sets out the minimum requirements in respect of the different types of customers.

Module 3 of the AML/CTF programs e-learning course will provide detailed information on Part B components of an AML/CTF program.