KYC/AML Compliance¶
Overview¶
Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance forms the foundation of investor verification and regulatory compliance across all jurisdictions.
Compliance Framework¶
Core Requirements¶
Universal compliance elements:
- Identity Verification: Confirming investor identity
- Source of Funds: Understanding wealth origin
- Risk Assessment: Evaluating investor risk profile
- Ongoing Monitoring: Continuous compliance checking
Jurisdiction Considerations¶
Adapt to local requirements:
- Regulatory Standards: Local authority requirements
- Documentation Needs: Jurisdiction-specific documents
- Verification Levels: Tiered approach based on risk
- Reporting Obligations: Local authority notifications
Identity Verification¶
Individual Investors¶
Standard verification process:
Basic Information¶
- Full legal name
- Date of birth
- Residential address
- Nationality/citizenship
Documentation¶
- Government-issued ID
- Proof of address
- Tax identification
- Additional as required
Enhanced Verification¶
- Biometric verification
- Video verification
- Document authentication
- Third-party validation
Entity Investors¶
Corporate verification requirements:
Company Information¶
- Legal entity name
- Registration details
- Business address
- Tax identification
Documentation¶
- Formation documents
- Ownership structure
- Director/officer list
- Good standing certificates
Ultimate Beneficial Ownership¶
- Ownership chain
- Control structure
- Individual verification
- Source of funds
Risk Assessment¶
Risk Categories¶
Investor risk classification:
Low Risk¶
- Established entities
- Regulated institutions
- Verified individuals
- Small investment amounts
Medium Risk¶
- Complex structures
- Multiple jurisdictions
- Moderate investment size
- Standard verification needs
High Risk¶
- PEPs (Politically Exposed Persons)
- High-risk jurisdictions
- Large investments
- Complex ownership
Risk-Based Approach¶
Tailored verification:
- Standard Due Diligence: Basic verification
- Enhanced Due Diligence: Additional checks
- Ongoing Monitoring: Continuous review
- Periodic Review: Regular reassessment
Verification Process¶
Automated Verification¶
System-driven checks:
- Document Upload: Investor provides documents
- OCR Processing: Automatic data extraction
- Database Checks: Sanctions and watchlist screening
- Risk Scoring: Automated risk assessment
- Decision Engine: Approval or escalation
Manual Review¶
Human verification when needed:
- Complex structures
- High-risk indicators
- Document issues
- System flags
Screening Requirements¶
Sanctions Screening¶
Check against restricted lists:
- Global Lists: UN, OFAC, EU, etc.
- Local Lists: Jurisdiction-specific
- Real-time Checks: Transaction screening
- Periodic Reviews: Regular re-screening
PEP Screening¶
Political exposure checks:
- Current political positions
- Family members
- Close associates
- Historical positions
Adverse Media¶
Negative news screening:
- Financial crimes
- Regulatory violations
- Reputational issues
- Legal proceedings
Documentation Management¶
Document Collection¶
Required documentation:
Standard Documents¶
- Identity documents
- Address verification
- Tax forms
- Bank statements
Additional Requirements¶
- Source of wealth
- Investment purpose
- Financial statements
- Legal opinions
Document Storage¶
Secure management:
- Encryption: Data protection
- Access Control: Limited viewing
- Audit Trail: Activity logging
- Retention: Compliance with requirements
Ongoing Monitoring¶
Transaction Monitoring¶
Continuous oversight:
- Pattern Analysis: Unusual activity detection
- Threshold Alerts: Large transaction flags
- Velocity Checks: Rapid movement detection
- Behavioral Analysis: Profile deviation alerts
Periodic Reviews¶
Regular reassessment:
- Annual Reviews: Standard investors
- Enhanced Reviews: High-risk investors
- Trigger Events: Status changes
- Regulatory Updates: New requirements
Reporting Obligations¶
Suspicious Activity¶
When to report:
- Unusual transactions
- Document inconsistencies
- Refused verification
- Sanctions matches
Regulatory Reporting¶
Required submissions:
- Periodic Reports: Regular compliance updates
- Transaction Reports: Large or unusual activity
- Annual Summaries: Yearly compliance overview
- Incident Reports: Specific event notifications
Technology Integration¶
KYC Providers¶
Third-party services:
- Identity verification platforms
- Document verification services
- Biometric authentication
- Database screening services
API Integration¶
System connectivity:
- Real-time verification
- Automated workflows
- Status updates
- Result storage
Best Practices¶
Compliance Excellence¶
- Documentation: Maintain comprehensive records
- Training: Regular team education
- Updates: Stay current with regulations
- Audits: Regular compliance reviews
Investor Experience¶
- Clear Communication: Explain requirements
- Efficient Process: Minimize friction
- Support: Help with documentation
- Transparency: Status updates
Exemptions and Variations¶
Qualified Investors¶
Streamlined processes for:
- Regulated entities
- Institutional investors
- Verified platforms
- Government entities
Small Investments¶
Simplified verification:
- Reduced documentation
- Basic verification
- Lower risk thresholds
- Expedited processing
Support and Resources¶
Compliance Support¶
- Regulatory guidance
- Documentation templates
- Process assistance
- Training materials
Technical Support¶
- Integration help
- API documentation
- Troubleshooting
- Best practices