1. Know Your Customer (KYC) Policy
Businesses must develop or improve procedures for verifying customer identities to prevent fraud and financial crimes.
- Purpose: KYC ensures that customers are who they claim to be, reducing risks of money laundering and identity fraud.
- Verification Process: Companies must collect official identification documents, proof of address, and financial details.
- Regulatory Compliance: KYC policies must align with global AML (Anti-Money Laundering) regulations.
2. Customer Due Diligence (CDD)
Businesses must establish standard practices to assess the legitimacy of clients and their source of funds.
- Risk Assessment: Companies evaluate customer risk based on transaction history, business activities, and financial background.
- Ongoing Monitoring: Businesses must continuously track customer transactions to detect suspicious activities.
- Compliance Standards: CDD follows international AML guidelines to prevent financial crimes.
3. Enhanced Due Diligence (EDD)
High-risk customers, such as politically exposed persons (PEPs) or offshore clients, require additional scrutiny.
- PEP Screening: Businesses must assess government officials and their associates for potential corruption risks.
- Offshore Clients: Companies must verify source of wealth and financial transactions for clients in high-risk jurisdictions.
- Stronger Compliance Measures: EDD includes background checks, transaction monitoring, and detailed financial reviews.