Know Your Client and Anti-money laundering policies


The AML Policy was introduced with the ultimate goal of providing a general framework to combat money laundering, terrorism, corruption and other financial crimes. The other goal is to protect the community from the legalization of money and ensure that the organization is compliant with r

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Know Your Client, also known as KYC, refers to numerous due diligence activities carried out not only by financial institutions but also by other regulated companies in order to obtain all relevant information about their clients before and during doing business with them. Each finance and business unit is responsible for adopting and implementing various KYC procedures and regulations.

Know Your Client's policies typically include procedures such as:
Collecting and analyzing a person's identity information and investigating the true beneficiary of the company and business accounts
Name comparison with lists of political parties (search for politically exposed persons or PEPs)
Determine a customer's likelihood of committing money laundering, terrorist financing, identity theft, or other criminal offenses
Creation of expectation profiles based on the transaction behavior of a customer and monitoring of deviations from this profile
The fight against money laundering, also known as AML, is a set of laws, regulations, and other practices designed to prevent the practice of generating income from illegal activities. Typically, money launderers hide the true source of their income through a series of steps that make it appear that money has been legitimately made from illegal activities. The Anti-Money Laundering Guidelines are designed to help institutions identify and investigate potential cases.

Globalization and the global information exchange system
KYC and AML guidelines are designed to provide solutions to eliminate the numerous risks that arise from the fact that financial institutions do not know their customers. On the other hand, these guidelines also tend to contradict the general expectations of an individual regarding confidentiality and privacy.

With the rapid advance of globalization over the past few decades, safety concerns have become a top priority not only for national regulators, but also for the international community in general. In response to growing concerns about money laundering, an intergovernmental organization called the Financial Action Task Force on Money Laundering (FATF) was established during the G7 summit in Paris in 1989, which shortly thereafter issued recommendations on money laundering and terrorist financing. All recommendations are to be implemented at national level through laws and other legally binding measures. In addition to the Know Your Client and anti-money laundering procedures described above, the FATF Recommendations require states to cooperate internationally and share relevant information in investigations.

A new international standard called AEI or Automatic Exchange of Information will come into force in participating countries to ensure that tax authorities exchange information about taxpayers' bank accounts. The main aim of the AEI is to make tax evasion impossible. The AEOI stipulates that banks must report information about bank and custody accounts to the domestic tax authorities. This information is then exchanged with the tax authorities of the AEI partner countries.

Possible solutions to protect confidentiality
Some jurisdictions consider divulging an account holder's name to be a criminal act. The privacy of the customers of a bank is protected by law and, by its very nature, is equated with the confidentiality obligation between doctor and patient or lawyer and customer. Although privacy is seen as a fundamental principle and highly protected in these jurisdictions, law enforcement authorities may be given access to relevant information as part of a criminal investigation.

Unless criminal charges have been made, however, offshore banks offer the highest level of confidentiality and security. Offshore banking jurisdictions are designed to protect assets from domestic litigation and other civil matters such as disputed estates or divorce. An even higher level of confidentiality and anonymity is achieved through other asset holding vehicles - for example international business companies and offshore trusts.

Another way to increase your privacy is to use a nominee so that your name does not appear in the company register as the owner of your company (nominee services). However, any bank that requires disclosure of the company's beneficiaries would still see your name on the list.

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