Know Your Customer (KYC) & AML Screening

Know Your Customer (KYC) and AML check are mandatory process of identifying and verifying the client's identity when opening an account and periodically over time throughout the customer journey. In other words, banks must make sure that their clients are genuinely who they claim to be.

The operational tasks are based on recommendations by the Financial Action Task Force (FATF) and widely adopted by central banks worldwide. It mandate that financial institutions under its purview undertake the following:

• Identify and verify the customer using reliable independent source documents and information, such as those from the Singapore corporation registry, ACRA or official licensees or distributors of ACRA data.
• Identify the beneficial owner and using reasonable efforts to verify them or those who are linked with them as a corporation or as an individual. This is done by drilling down into the corporate hierarchy of shareholders and/or the shareholders of shareholders.
• Understand and verify the nature and purpose of the intended business relationships.
• Perform continual monitoring and regular review and updating of the clients' information to ensure that it is consistent with the information gathered.
• Customer review must also be done on certain defined triggers, including transactional activities or if reasonable suspicious transactions arise.

Such task includes ensuring that the customers, the corporations and persons associated with the customers are screened against relevant money laundering, terrorism financing, PEP and sanctions sources.

To fight fraud, insurers must perform Know Your Customer (KYC) as part of their risk assessment by type of client, insurance policy, geography, and sanctions screening. Insurance firms must perform Know Your Customer (KYC) from the start to prevent them from opening an account, purchasing a policy, or receiving a payout.

Know Your Customer (KYC) and AML checks on both customer and supplier, or annual supplier audits are usually conducted by large corporations as part of their compliance practices and form part of the risk assessment process for a company's existing or potential customers or supplier under AML guidelines. This is to ensure that they are not unwittingly breaching sanctions or participating in AML, CTF activities without checking who their vendors are or who their customers are connected to.

With AML screening, businesses ensure that their existing or potential customers or suppliers are not present in any of the sanctions lists, PEPs, banned or wanted lists, and adverse media data.