Leading KYC & AML compliance solution
-
Leading KYC & AML compliance solution.
In business, the tracing paper "key-way-si" or the direct translation "know your customer" is usually used to designate this procedure.
The purpose of this procedure is to establish a sufficient amount of information about a real or potential counterparty in order to make a decision on the possibility of interacting with him. Sometimes this procedure is called "due diligence of the client", i.e. due diligence in interaction with counterparties.
For a long time, the procedure under consideration was typical mainly for banking activities. For these purposes, banks identify customers, as well as verify information about them. One of the basic acts in this area today is the Instruction on internal control in the implementation of banking operations No. 818.
Leading KYC & AML compliance solution kycaid.com
In accordance with the Instruction on Internal Control when performing banking Operations No. 818, the bank identifies the customer before being accepted for service (clause 43). The Bank records the data established during the identification of customers in an electronic database, while entering data into this database is carried out by filling out a customer questionnaire. For each group of clients (individuals, sole proprietors, organizations (with the exception of respondent banks), respondent banks), the bank develops a client questionnaire, which is an internal document of the bank. During verification, the Bank verifies the identification data obtained from various sources of information and, if necessary, clarifies and supplements the data obtained during the identification of the client (paragraphs 46, 47, 48, 59 of the Instructions on Internal Control during Banking Operations N 818).
In addition, customer identification and verification procedures are an integral part of the activities of HTP residents who carry out activities related to cryptocurrencies, tokens. Based on a risk-based approach, such entities evaluate clients (according to a number of criteria) in order to determine the possibility of entering into contractual relations with them.
In general, the internal control rules of a number of entities provide for the identification and verification of customer information. First of all, the aspects related to the prevention of the legalization of proceeds from crime, the financing of terrorist activities and the financing of the proliferation of weapons of mass destruction are checked; information on the presence of a criminal record; analysis of how suspicious the planned transaction is. In general, for a business, the KYC procedure may cover other significant aspects. In particular, if the client (individual or legal entity) was or is a participant in a certain scandal, judicial or other proceedings related to corruption or other crimes in the financial sphere.
Thus, today the KYC procedure is carried out by completely different organizations, which is due not only to the issues of countering the laundering of money obtained by criminal means, but also for other reasons, since entering into contractual relations with certain entities can have a significant negative impact on the reputation and, accordingly, the company's income. In addition, the verification of counterparties avoids excessive attention of regulatory or inspection bodies, which, including within the framework of verification measures, may show interest in entities that interacted with the entity involved in illegal activities.