Similar to the identification and monitoring applied to individual accounts, corporate accounts also require know your client (KYC) practices. In this article, we will highlight the logistical challenges organisations face when implementing and conducting KYB on its customers.
Though the Know Your Business (KYB) process holds broad comparisons to KYC for individual customers, the details are different. Corporate customers generally have higher transaction volumes and amounts, as well as other higher risk factors.
Organisations must implement the following key processes to implement an effective KYB program which identifies and categorises high risk customers.
Even though specific information that organisations gather may differ from region to region, organisations still need to gather information methodically and incorporate it into their workflows. Information that can be used to identify and verify an accurate company record includes:
Organisations must determine the entities or persons who have an ownership stake, either through direct ownership or through another party. Organisations can have multiple owners with different rights and liabilities, such as greater decision-making power or higher economic benefits.
The ultimate beneficial owner (UBO) is an individual who owns or controls more than 25 percent of the shares or voting rights in a legal entity. They hold the right to appoint or remove most of the board of directors or have the right to exercise significant influence or control over the company.
For all individuals determined UBO must undergo additional AML/KYC checks. Know Your Customer (KYC) procedures and sanction screenings help to ensure that the UBO can be identified, and customer due diligence completed. In addition to UBO, there is something referred to as the Ultimate Parent Company (UPC) which is also subject to screening.
To comply with KYB regulations, and similar regulations imposed by region, organisations must employ an AML framework. Organisations should assess the level of risk that their business associations and implement an adequate AML control, including:
For over a decade SQA Consulting has been a global market-leader supporting our diverse blue-chip client network with their AML requirements.
We provide consultation on all aspects of KYC and KYB strategies and can assist in the implementation of processes to ensure compliance to regulatory standards. To learn more please email aml-prevention.services@sqa-consulting.com or call +44(0)161 503 0533.
