A question we’re often asked when preparing AML/CFT Programmes and Know Your Customer (KYC) policies and procedures is:
What do we need to find out when recording the nature and purpose of a customer’s business relationship with us?
As you know, there are two primary requirements when it comes to KYC best practice and standard customer due diligence:
- Identity information about your customer that can be appropriately verified;
- Information about the nature and purpose of your customer’s proposed business relationship with you, and enough information to know whether enhanced due diligence (EDD) requirements kick in.
You must find out this information as you onboard your customer. While you will get a better picture of a customer’s financial activity and risk profile once they are transacting with you, the intent of the requirements of the IVCOP and AML/CFT Act are that this happens before they start transacting.
The customer identity requirements get the most airtime within the clients we work with. There is something comforting about the fact that you can check a box when they are complete.
Understanding and recording the nature and purpose of your customer’s intended relationship with you is much more qualitative. What you need to find out totally depends on your business type, and your customer types.
Here, we’ve pulled together a suggested list of KYC best practice dos and don’ts to make it a little clearer:
|When determining the nature and purpose (N+P) of your customer’s proposed relationship with you|
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