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Guide to Essential Money Tools
Banking Tools
Knowing me, knowing you
Every offshore financial institution has to get to know you, the customer, to comply with anti-money laundering legislation.
Know Your Customer (KYC), also described as Customer Due Diligence (CDD), is now an established part of offshore money management ethos. At the introductory stage of every offshore financial agreement – say, for example, when opening an offshore bank or deposit account, customers and banks must now comply with the KYC regulations. There are obligations of compliance resting on both sides – with the institution’s manager and with the customer.
To this end, there are core details which the manager must ascertain about a customer’s financial circumstances, as well as further information which will financially authenticate that customer’s lifestyle. This includes not only knowing the basics – identity and address details and length of stay at the address – but also finding out a lot more about the ‘profiles’ of each customer. This entails securing information such as the nature and geographic location of the customer’s employment or business, the source of their funds and details of their transaction patterns. In other words, KYC involves the bank knowing where the funds have come from (which could include earned income, an inheritance, property or business sale) and why the customer wants an offshore account.
The scope of the information requested from customers is designed to give the banks a broad understanding of each customer’s business. This is very much an ongoing process for reputable banks, not only because it is a regulatory requirement, but also in as much as it assists banks in appreciating a customer’s forward planning. This, in turn, suggests how they intend to operate their account. Banks continually monitor accounts to ensure that the customer is running their account in line with the activity profile envisaged, and stated, at the time the account was initially opened. So it’s very much in the interest of the customer to ensure that the bank is kept abreast of any changing personal or financial circumstances, as this will help minimise unnecessary investigations.