Know Your Customer & Customer Due Diligence
Know Your Customer requires identity verification, sanctions screening, a client profile report of ML/FT risks and ongoing monitoring. AML360 Software provides One Platform for your AML/CFT compliance, governance and risk management.
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Is Your Firm Compliant with Know Your Customer?
Know Your Customer and Customer Due Diligence obligations should be streamlined at time of customer onboarding.
All data relevant to complete Know-Your-Customer regulatory obligations should be obtained before commencement of the business relationship. Though most businesses comply with the need to verify the identity of clients, few apply regulatory requirements for Client Risk Assessments.
Obligations for client risk profiling arise under New Zealand’s legislation known as the Anti-Money Laundering and Countering Financing of Terrorism Act (the AML/CFT Act). Section 22(1)(d) of the AML/CFT Act obligates businesses to apply Enhanced Due Diligence on Higher Risk customers.
AML360 provides your firm with an effective and low cost Client Risk Profiling (Know Your Customer) reporting solution.
What is Know Your Customer?
Know Your Customer (KYC) means more than identity verification. Know Your Customer refers to the need to be informed of the intended business relationship and account activity pertaining to customers.
New Zealand’s AML/CFT laws require the ‘Nature and Purpose’ of the client relationship to be captured by the business entity at the time of customer onboarding.
What Type of Data is Required for Know Your Customer?
Know Your Customer requires data that reasonably informs of the ‘Nature and Purpose’ of the customer relationship.
Data that can assist includes the intended number of transactions or activity (approximately) that the customer intends to carry out over a 12-month period.
The value of transactions and/or activity is also helpful to obtain.
The data for both Volume and Value of transactions or activity assists to feed into Ongoing Monitoring compliance obligations.
Whether the client’s account activity is for personal or commercial purposes should also be understood.
If a client that is a commercial business is also servicing transactions on behalf of their own clients, then Know Your Customer’s Customers becomes relevant.
What is the Purpose of KYC AML/CFT laws?
When a business is obligated to understand the nature and purpose of the customer’s account activity, the business is better informed of what type of transactions or activity to expect.
By having knowledge of the expected client activity, the business is in a better position to make informed judgements whilst performing ongoing monitoring of AML/CFT compliance obligations.
What is 'Inherent' and 'Residual' Risks
AML/CFT risks should be considered at two levels (1) inherent risks and (2) residual risks.
Inherent risks refers to those characteristics that are present and known to increase ML/FT risks. A simple example is a business that is cash intensive.
A cash intensive business is considered to have inherent risks to facilitating money laundering and/or financing of terrorism due to cash being a known typology for the placement stage of money laundering.
The residual risks refers to the risks that an AML/CFT Programme will manage following implementation of Policies, Procedures and Controls. When Policy, Procedures and Controls are adequately applied, residual risks should always present a lower level of risk compared to ‘inherent risks’.
How Can AML360 Assist with Know Your Customer?
AML360 Software provides effective solutions that streamline Know Your Customer reporting into day-to-day business operations.
We offer an affordable AML/CFT Compliance Solution to small sized businesses.
We assist your business to develop a customised Know Your Customer profile methodology. We then implement the methodology with effective regulatory reports for your record keeping.
For medium and large institutions, AML360 provides a sophisticated solution to meet the nature, size and complexity of business.