- What is the KYC process?
- Which countries require enhanced due diligence?
- How do you carry out enhanced due diligence?
- What are the AML requirements?
- When should CDD be conducted?
- Who is beneficial owner in KYC?
- When should a bank apply customer due diligence?
- Which countries require enhanced due diligence due to the sanctions risks associated with them?
- Why is EDD required?
- What are considered higher risk customer types for money laundering?
- Is KYC part of CDD?
- What is the difference between KYC and CDD?
- What is enhanced due diligence checklist?
- What is required for enhanced due diligence?
- What are the 3 main factors to consider in determining AML risk?
- What are the 3 components of KYC?
- What is standard due diligence?
- What is enhanced customer due diligence?
- What is the difference between CDD and EDD?
- What is the definition of enhanced due diligence EDD?
- Who are high risk customer types?
What is the KYC process?
KYC means Know Your Customer and sometimes Know Your Client.
KYC or KYC check is the mandatory process of identifying and verifying the identity of the client when opening an account and periodically over time.
In other words, banks must make sure that their clients are genuinely who they claim to be..
Which countries require enhanced due diligence?
Afghanistan, Bosnia and Herzegovina, Ethiopia, Guiana, Iraq, Iran, North Korea, Laos, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Uganda, Vanuatu and Yemen are currently listed as high-risk third countries.
How do you carry out enhanced due diligence?
How to Conduct Enhanced Due Diligence: A GuidelineStep 1: Employ a Risk-Based Approach. … Step 2: Obtain Additional Identifying Information. … Step 3: Analyze the Source of Funds / Wealth and Ultimate Beneficial Ownership (UBO) … Step 4: Ongoing Transactions Monitoring. … Step 5: Adverse Media and Negative Check.More items…
What are the AML requirements?
Firms must comply with the Bank Secrecy Act and its implementing regulations (“AML rules”). The purpose of the AML rules is to help detect and report suspicious activity including the predicate offenses to money laundering and terrorist financing, such as securities fraud and market manipulation.
When should CDD be conducted?
The application of Customer Due Diligence (CDD) is required when companies with AML processes enter a business relationship with a customer or a potential customer to assess their risk profile and verify their identity.
Who is beneficial owner in KYC?
What is Beneficial Ownership? According to the FATF, “beneficial owner refers to the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted.
When should a bank apply customer due diligence?
The customers have less probability of being involved in money laundering or terrorist financing. Enhanced Due Diligence or EDD is required when a customer is perceived to be at a higher risk to the company.
Which countries require enhanced due diligence due to the sanctions risks associated with them?
Some of the countries are still in the list of high-risk third countries and require EDD by the European Commission. Countries in the greylist: Albania, The Bahamas, Barbados, Botswana, Cambodia, Ghana, Iceland, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Pakistan, Panama, Syria, Uganda, Yemen, Zimbabwe.
Why is EDD required?
In the prevention of money laundering and terrorist financing, EDD has become the standard practice. EDD is required before any business relationship or deal can be reached between two parties. … For suspicion of money laundering or when there is a suspicious activity monitoring.
What are considered higher risk customer types for money laundering?
There are high-risk customers your institution may be more familiar with, such as cash intensive businesses, nonresident aliens, foreign individuals, politically exposed persons (PEPs), and money service businesses (MSBs); however, there are also other high-risk customers to consider, such as nonbank financial …
Is KYC part of CDD?
Customer Due Diligence (CDD) or Know Your Customer (KYC) policies are the cornerstones of an effective AML/CTF program. Put simply, they are the act of performing background checks on the customer to ensure that they are properly risk assessed before being onboarded.
What is the difference between KYC and CDD?
What’s the difference between KYC and CDD? CDD (Customer Due Diligence) is the process of a business verifying the identity of its clients and assessing the potential risks to the business relationship. KYC is about demonstrating that you have done your CDD.
What is enhanced due diligence checklist?
Enhanced Due Diligence (“EDD”) is additional information collected for higher-risk customers to provide a deeper understanding of customer activity to mitigate associated risks. Customer risk assessments can be used to determine which level of due diligence to apply.
What is required for enhanced due diligence?
Enhanced Due Diligence factors Occupation or nature of business. Purpose of the business transactions. Expected pattern of activity in terms of transaction types, dollar volume and frequency. Expected origination of payments and method of payment.
What are the 3 main factors to consider in determining AML risk?
Inherent BSA/AML risk falls into three main categories: (1) products and services, (2) customers and entities, and (3) geographic location.
What are the 3 components of KYC?
The 3 Components of KYCThe first pillar of a KYC compliance policy is the customer identification program (CIP). … The second pillar of KYC compliance policy is customer due diligence (CDD). … The third pillar of KYC policy is continuous monitoring. … We can help protect your customers and your institution.
What is standard due diligence?
Standard due diligence requires you to identify your customer as well as verify their identity. … This due diligence should provide you with confidence that that you know who your customer is and that your service or product is not being used as a tool to launder money or any other criminal activity.
What is enhanced customer due diligence?
Enhanced customer due diligence involves making extra checks on a customer’s identification, collecting additional information and doing additional verification. Carrying out ECDD allows you to decide whether a suspicious matter should be reported.
What is the difference between CDD and EDD?
CDD aims at collecting data about customers’ identity and contact information as well as measuring their risk. EDD is used for high-risk customers, aka those who are more likely to implement related to money laundering and terrorism financing activities due to the nature of their business or transactions.
What is the definition of enhanced due diligence EDD?
Enhanced due diligence (EDD) is a KYC process that provides a greater level of scrutiny of potential business partnerships and highlights risk that cannot be detected by customer due diligence. EDD goes beyond CDD and looks to establish a higher level of identity assurance by obtaining the customer’s identity and …
Who are high risk customer types?
Classification of High Risk CustomersCustomers linked to higher-risk countries.Customers from High Risk Business sectors.Customers who have unnecessarily complex or opaque beneficial ownership structures.Unusual account activity.Lack an obvious economic or lawful purpose.Politically Exposed Persons (PEPs)More items…