Know your customer

As a know -your-customer ( KYC; German: know your customer ) is referred to a prescribed especially for credit institutions and insurance verification of identity of important new customer for the prevention of money laundering.

Background

In particular, to combat money laundering, criminal activity and economic crime and terrorism, were created minimum standards for the identification of new customers internationally. These rules are intended to prevent that are lightly moved about as bogus companies money back and forth. With the KYC must be checked before opening an account for new customers, who the customer is, how the business model looks like and where the financial flows originate.

Legal basis

The key factors for the KYC requirement of European financial entities of Article 8 in the 3rd EU Anti- Money Laundering Directive. May be excluded from the general checking " standard small customers" who want to make neither particularly large nor particularly unusual shops and were previously divided into a suitably safe risk class.

These tests are also important from the viewpoint of various laws and regulations to combat terrorism and compliance. In particular, prohibit a wide variety of state laws and regulations of international organizations business with certain people and countries. If, for example, can not be met, the special regulations of the United States of America, threaten the financial companies of substantial fines over imprisonment for senior staff, to the withdrawal of the entire business permit. In addition, is the reputational risk that may arise from negative headlines in lack of control, not to be underestimated.

Information to be collected

For natural persons, in particular the nature of the occupation and to the purpose of the relationship must be recorded.

For legal entities, including the nature of society, business, industry, industry code, number of employees, ownership and corporate structure, and the main (expected) financial indicators must be recorded.

It must also be clarified in general, the origin of funds and assets. The details of the planned scope and customer relations as eg Payment types must be listed.

In politically exposed persons ( PEP) and the function together with places of performance it must be held.

All persons on the creation of the KYCs significantly participating and subsequent amendments to the KYC master document must also be logged.