Know Your Customer (KYC) Program Know Your Customer, Customer Due Diligence and Enhanced Due Diligence Primer

Know Your Customer

Know your customer (KYC) is the process of a business identifying and verifying the identity of its clients. The term is also used to refer to the bank regulation which governs these activities. Know your customer processes are also employed by companies of all sizes for ensuring their proposed agents, consultants, or distributors are anti-bribery compliant. Casinos, banks, insurers and export creditors are increasingly demanding that customers provide detailed anti-corruption due diligence information,

Customer Due Diligence

Customer Due Diligence. A designated person does not have to identify information on the purpose or intended nature of the business relationship of a customer, or the beneficial owner of a customer, where the customer is considered to present a low risk of money laundering or terrorist financing.

Enhanced Due Diligence
Enhanced Due Diligence

Enhanced Due Diligence for Higher-Risk Customers. Customers that pose higher money laundering or terrorist financing risks present increased exposure to banks; due diligence policies, procedures, and processes should be enhanced as a result.

Risk Assessment
Risk Assessment
a systematic process of evaluating the potential risks that may be involved in a projected activity or undertaking.
Customer identification Program
Customer identification Program

Purpose of the policy is to establish guidelines for what types of identification are acceptable as primary identification. The policy establishes the acceptable primary identification for entry, serving alcoholic beverages, promotional card purposes (including initial issuance, prize claims, retail redemptions) and cage transactions that require identification at the Casinos.

The CIP must contain risk-based procedures for verifying the identity of the customer within a reasonable period after the account is opened. The verification procedures must use the information obtained for identifying information obtained by the casino. A casino must verify enough information to form a reasonable belief that it knows the identity of the customer. The casino’s procedures must describe when it will use documents, nondocumentary methods, or a combination of both.

Information Sharing

FinCEN’s 314(a)

FinCEN’s regulations under Section 314(a) enable federal, state, local, and foreign (European Union) law enforcement agencies, through FinCEN, to reach out to more than 39,000 points of contact at more than 16,000 financial institutions to locate accounts and transactions of persons that may be involved in terrorism or money laundering. FinCEN receives requests from law enforcement and upon review, sends notifications to designated contacts within financial institutions across the country once every 2 weeks informing them new information has been made available via a secure Internet web site. The requests contain subject and business names, addresses, and as much identifying data as possible to assist the financial industry in searching their records. The financial institutions must query their records for data matches, including accounts maintained by the named subject during the preceding 12 months and transactions conducted within the last 6 months. Financial institutions have 2 weeks from the posting date of the request to respond with any positive matches. If the search does not uncover any matching of accounts or transactions, the financial institution is instructed not to reply to the 314(a) request.

314(b) Voluntary Information Sharing

Section 314(b) of the USA PATRIOT Act provides financial institutions with the ability to share information with one another, under a safe harbor that offers protections from liability, in order to better identify and report potential money laundering or terrorist activities. 314(b) information sharing is a voluntary program, and FinCEN strongly encourages information sharing through Section 314(b).

What are the Benefits of 314(b) Voluntary Information Sharing?

Gathering additional information on customers or transactions potentially related to money laundering or terrorist financing, including previously unknown accounts, activities, and/or associated entities or individuals. Shedding more light upon overall financial trails, especially if they are complex and appear to be layered amongst numerous financial institutions, entities, and jurisdictions. Building a more comprehensive and accurate picture of a customer’s activities where potential money laundering or terrorist financing is suspected, allowing for more precise decision-making in due diligence and transaction monitoring.

William Owen Logan

Wmologan@gmail.com

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William Logan
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