KYC Foundations Module I Flashcards
‘New Business’?
Prior to establishing a relationship with a new customer, a KYC review is performed
‘Incremental New Business’?
(Describes the process of adding new accounts or products).
When an existing customer opens a new account or begins using a new product with potential AML ramifications, incremental KYC may be required.
eg. Existing US based customer, who wants to open another account with BNY in a different Jurisdiction such as Singapore, we would need to complete an Incremental New Business KYC request to obtain additional jurisdiction specific documents, and any other information needed to open this account.
Periodic Review - On Cycle
KYC reviews on existing customers following a risk-based frequency, which are scheduled and referred to as “on-cycle”. eg. annually.
Periodic Review - Off Cycle
Periodic reviews performed on existing customers that can be initiated due to a trigger event which leads to increase in Client Risk Rating (CRR) - e.g. Negative Media, PEPs or other high-risk factors added to CRR Calculation
What are the steps in Periodic Review and New Business process?
- Verify - Information received about the client
- Research - Public domain to meet requirements
- Request - Remaining information
- Screen - New names on client profile
- Complete Requirements and upload documents
- Quality Control - 4-eye review profile - remediation sent back to KYC analyst if needed
- Approvals - From the LOB, compliance and others.
What is a New Party Intake form?
This is a first step om creating a new client relationship.
This form is completed by the LKYCO where an analyst receives instructions in EKYC to complete KYC requirements of client, before we onboard them.
NEXEN > Admin > Onboarding
What is a Business Connect?
- Only applicable to Periodic Reviews -
Business Connect is initiated by the KYC PR Analyst and is sent to the LKYCO to complete prior to conducting the review on the profile.
Need to check if the LKYCO name is correct or will need to be updated by the COE (Centre of Excellence).
NEXEN > Risk & Compliance > Workbook
What are the 2x types of Customer at BNY?
An Account Holder is any individual or legal entity that opens and/or operates an Account.
- Person
- Entity
Types of Accounts (Name 3)
Transactional
Non-Transactional
Internal Account Opening
Government (Customer Type)
Includes government entities/political subdivisions, government departments, government agencies, and quasi-governmental organizations.
Can be categorized into the following types:
- Government entities/Political Subdivisions
- Government Departments and agencies
- Quasi-Governmental organisations
Can be categorized into the following sub-types:
- Central
- Regional
- Local
- Foreign
Government Entities/Political Subdivisions - (Government)
Government entities and political subdivisions exercise governmental authority.
Exclusively governmental in nature, that is, activities involving the direct exercise of legislative, executive, or judicial authority.
Do not involve taking profits from the endeavour.
Examples:
- Countries
- Provinces/states
- Municipalities
- Towns
- Cities
- School districts
Government departments and agencies - (Government)
Administrative units of central (i.e. national), regional or local governments that are tasked with specific responsibilities.
Examples:
- US Department of Defence
- The Federal Emergency Management Agency (FEMA)
- California Department of Education
Quasi-governmental organizations - (Government)
Organisations that have been assigned by law or created by a government entity/political subdivision, which include some legal characteristics or the private sector and are formed as a non-profit.
Examples:
- Public Hospitals
- Public/State Colleges and Universities
- Public Libraries
Central - (Government sub-type)
Entities established under the authority of the governing body (executive, legislative, judicial) of an entire nation or country (e.g. federal agency in the U.S.)
Regional - (Government sub-type)
Entities established under the authority of a political subdivision/region of a nation or country which is larger in scale than a city or municipality, or other subdivisions of local government.
Local - (Government sub-type)
Entities established under the authority of a city, municipality, or other subdivisions of local government
Foreign - (Government sub-type)
Any Government entity which is foreign, in relation to the specific BNYM institution onboarding the government entity.
Non-Bank Financial Institution (Customer Type)
A Non-Bank Financial Institution (NBFI) is a financial institution other than a bank that offers financial services. The USA PATRIOT ACT defines NBFI as a variety of non-bank entities.
Money Service Business (MSB) - (Non-Bank Financial Institution (NBFI) type)
A Business that exchanges currency, transmits money or any representation of money or cashes checks.
Investment Advisor - (Non-Bank Financial Institution (NBFI) type)
Any person or group that makes investment recommendations or conducts securities analysis in return for a fee, whether through direct management of clients’ assets or by way of written publications.
Third Party Payment Processor (TPPP) - (Non-Bank Financial Institution (NBFI) type)
Third Party ACH Service Provider provides payment-processing services to merchants and other business entities.
Loan or Finance Company - (Non-Bank Financial Institution (NBFI) type)
An organization that makes loans to individuals and businesses. Unlike a bank, does not receive cash deposits from clients or provide other services common to banks.
Virtual Asset Service Provider - (Non-Bank Financial Institution (NBFI) type)
Any natural or legal person who as a business conducts one or more of the following activities or operations for or on behalf of another natural (Human) or legal (Entity) person.
Exchange between Virtual Assets (crypto assets) and Fiat Currency.
6 other Non-Bank Financial Institution (NBFI) types
- Dealer in Precious metals, Stones or Jewels
- Casino / Gaming establishments
- Insurance company including reinsurance company
- Travel Agency
- Operator of a credit card system
- Business engaging in vehicle sales including Cars, Airplanes and Boats
Trusts
Trusts are private fiduciary arrangements that allow a grantor, or settlor to place assets for future distribution to beneficiaries.
What are the 2 types of Trusts?
Statutory and Non-Statutory.
- Statutory Trust - Is created and regulated under specific statutes or laws enacted by a government or legislative body.
These laws define the rules and requirements for establishing, operating, and dissolving the trust. - Non-Statutory Trust - Is an arrangement between three parties.
The founder of the trust is known as the grantor. This person can also be known as a donor settler, or trustor.
Grantor? - (Trusts)
The founder of the trust is known as the grantor. This person can also be known as a donor settler, or trustor.
The grantor transfers legal title of property or assets, such as a house, business, or funds to a trustee.
Trustee? - (Trusts)
- Takes legal ownership of the assets held by a trust
- Assumes fiduciary responsibility for those managing those assets and carrying out the purposes of the trust.
Beneficiary? - (Trusts)
- Receives the assets of the trust
- Benefits from the trust
Family Trusts? - (Trusts)
Common in state planning to ensure certain beneficiaries receive assets when the grantor dies
Charitable Trust? - (Trusts)
Is an irrevocable trust that benefits a particular charity or the public.
Pension Plans - (Trust)
Are a type of trust that are funded by an employer and consist of a pool of funds that are set aside for employees future benefit.
What are the 3 types of Trust structures?
- Simple Trusts
- Grantor Trusts
- Complex Trusts
Simple Trusts?
A simple trust distributes all of it’s income it earns on its assets to the beneficiaries annually.
Simple trusts cannot distribute the principal of the trust, meaning the property that the trust owns or receives.
They cannot make distributions to charitable organisations.
Complex Trusts?
Any trust that does not meet the requirements for a simple trust.
Grantor Trusts?
Are a type of Living Trust where the Grantor remains control over the trust’s income and assets/property.
Are revocable living trusts while the grantor is living. This means they can make changes to the trust as they see fit.
