KNOW YOUR CUSTOMER CORPORATE REGULATION

KYC is the mandatory process of identifying and verifying the identity of a corporate client when opening an account, as well as on an ongoing basis. A key element of the openness and transparency agenda introduced after the 2008 financial crash, KYC regulation is overseen on a national basis and implemented in line with organisations’ own risk and governance frameworks.

Again, it is the responsibility of banks to make sure that their clients are genuinely who they claim to be, and they should refuse to open an account and end business relationships if prospective clients fail to meet minimum KYC requirements or are found to be providing false information.

PwC outlines the five key steps of the KYC onboarding process as follows:

1. Identification: a collection of customer data, representation rules and ownership structure using confidential sources and the transparency register.
2. Verification: comparison and verification of the identification documents submitted.
3. Screening: checking the client for Politically Exposed Persons (PEPs), embargoes, sanctions and reputation risks for the bank.
4. Risk rating: risk classification of the client and determination of the required due diligence by the bank.
5. Onboarding decision: based on the information collected in previous steps.

KYC is not confined to onboarding and should be refreshed on a regular basis under a process called KYC remediation and ongoing monitoring, defined as the process of cleaning and updating corporate customer data to ensure compliance with the latest information and regulations.

Source: A white paper from FINEXTRA in association with KYCKR

March 2021