KYC Compliance Mandate – What Are the Required Documents?

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KYC compliance is a mandate that the world demands from financial institutions worldwide. KYC compliance is a mainly presented on the risk mitigation platform.

Though KYC had been introduced to many countries’ financial institutions, it was taken more as best practise and not mandated. It was only after the 9/11 terrorist attacks on the twin towers in the America that it became a mandate for many countries. There were increased terrorist attacks and activities with the dawn of the new millennium. With Globalisation and improved communication in the world, the ills of society were unmasked. Corporate scandals which had reached new heights were also exposed. It was clear the role played by dirty money or laundered money was very influential in local and cross border crime and terrorism. The need to discourage and attempts to cut down these exploitations of the worldwide financial services and systems became most urgent.

KYC compliance did not originate with the coming into law of the Patriot Act which by President. Many financial services worldwide were already having some form of know your customer compliance mandates in place. The need for due diligence and customer identifications checks were in place to mitigate operational risks and frauds while ensuring acceptable and consistent levels of service provision. The USA Patriot Act was more an affirmation and extension of what was already in existence. The anti-terror law developed to create the Anti-Money Laundering (AML) Act which is compulsory for all service providers and financial institutions.

Regulators in different countries hold financial institutions or service providers accountable to make sure that prospective account holders are identified and KYC compliance done. escalation to the regulators are a must for accounts that are suspicious so that thorough and in depth KYC compliance is done. All KYC compliance documentation are stored as evidence that due diligence was carried out.

Financial institutions should adopt highly structured risk intelligence reporting systems to meet their regulatory requirements and KYC compliance. The choice of the system depends on the financial institution. The documents required from applicants are:

  • Identification documents,
  • banking history or statements from your bank or your guarantor,
  • letter of introduction,
  • evidence of income and
  • evidence of residence.

Financial institutions should also make sure to call back on the telephone number that is indicated by the customer. This is a quick way to confirm the telephone number works and belongs to the applicant. All the other KYC compliance documentation must still be verified against original copies.