Customer identification: Know your customer (KYC)
As a reporting entity you must apply customer identification procedures to all your customers. Part B of your AML/CTF program is solely focused on these ‘know your customer’ (KYC) procedures.
You must document the customer identification procedures you use for different types of customers. The procedures you use must be based on the level of money laundering/terrorism financing risk that different customers pose.
You must check a customer’s identity by collecting and verifying information before providing any designated services to them. You must identify both individual customers (people) and non-individual customers (such as companies, associations or trusts).
After checking a customer’s identity you must be satisfied that:
- an individual customer is who they claim to be
- a customer who is not an individual is a real entity (a business or organisation that actually exists) and you know the details of its beneficial owners.
KYC and being familiar with your customers’ typical financial transactions makes you aware of any unusual or suspicious activity and reduces the risk of your business or organisation being exploited for money laundering or terrorism financing purposes.
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