Know Your Customer & Due Diligence Flashcards
What is AML?
Set of processes designed to assist institutions in their fight against money laundering, terrorist financing, and other financial crimes
What is KYC?
The process of identifying and verifying your customer’s identity and building the customer’s risk profile upon onboarding and on a continuing basis
What are the 3 W Questions asked with KYC?
1) Who is the customer and what do they do?
2) Why do they want to do business with the bank?
3) What risks do they bring to the bank?
What is a key component of KYC?
Reviewing documents to verify information or authorization
What is a Beneficial Owner ( BO) ?
The individuals that own or control the business
What is the percentage that FINCEN requires to be identified?
Ownership: Any owner with 25% or more of direct or indirect equity interest
FINCEN defines control as what?
– A natural person within the management
structure that has significant responsibility to control,
manage, or direct the legal entity
In the US, Beneficial Ownerships do NOT apply to what?
1) Sole Props
2) Majority of Trusts
3) Publicly Traded Companies
4)NGOS, charities, religious orgs
5) Entities registered with Securities Exchange Commission
Per European regulations, Beneficial Ownership must be what?
Verified for every customer that is a legal entity, regardless of the business type
(AMLD5) defines beneficial ownership as:
Someone who ultimately owns or controls the customer and/or the natural
person on whose behalf a transaction is being conducted.
What is EDD used for?
To mitigate risk of high risk customers
EDD should be conducted when?
At onboarding and on a continuous basis
CIP?
Name, Address, DOB, SSN
CDD?
Occupation, What they are doing with the funds, expected activity, source of funds, purpose of account, negative news, beneficial ownership
EDD?
Review of High-
Risk Customers
Identified by the
Bank Risk is
Determined by
Incorporating CIP
and CDD into a
Risk Model
