2.3 Customer due diligence: KYC, KYB, PEPs and sanctions

Transcript

Customer due diligence is the heart of AML/CTF. Here's how it works. It's about knowing who you're dealing with. You identify your customer, verify who they are using reliable documents or data, and screen them for risk. For individuals, that's K-Y-C. For companies, trusts and super funds, that's K-Y-B: you confirm the entity, then look through it to the people behind it. Those people are the beneficial owners: individuals who ultimately own 25 per cent or more, or otherwise control the entity. For a trust, that includes the trustee and whoever controls the trust. Screen your customers for politically exposed persons and sanctions. Many businesses also check adverse media. Where the risk is higher, like a foreign PEP or a complex structure, do enhanced due diligence. Ask more questions, including where the money comes from, and get senior manager approval where it's required. And it doesn't stop at onboarding. Ongoing due diligence means watching for changes and unusual activity for as long as they're your customer. Quick recap. Identify, verify and screen every customer. For entities, find the beneficial owners. Do more where the risk is higher, and keep watching for changes over time. Next up: reporting, records and training.