What is required to Know Your Customer?
According to the KYC requirements as set out in the Rules that accompany the AML/CTF Act, there are basically two major requirements to Know Your Customer:
- collect your customer information
- verify these details with reliable and independent data sources
You will have to collect and verify KYC details for all your customers, including both organisations and individuals.
KYC For Organisations
For organisations, details on the organisation have to be collected and verified with documents from the appropriate registration bodies. The information that has to be collected for each type of organisation (e.g. business partnership, private/public company, public/private foreign company, trust, association etc) can include the beneficial owner, registered office, principal place of business, name of each director etc (for a complete list of the details required for each organisation type see the Rules accompanying the AML/CTF Act).
The organisation details can be verified with the appropriate documents from various government bodies (e.g. ASIC, the various state Offices of Fair Trading, Department of Taxation etc).
Needless to say, the KYC solution we offer will enable electronic verification of organisation details from the appropriate bodies in keeping with the requirements outlined by the Rules.
KYC For Individuals
For individuals, the minimum information that needs to be collected includes:
- name
- date of birth
- address
For verification, the customer’s name and either the residential address or date of birth have to be verified by means of:
- original or certified primary photographic identification or
- both primary non-photographic identification and an original or certified secondary identification document
It appears that the KYC verification procedures for individuals can be less rigorous than the hundred point check currently used by many organisations. KYC checks for individuals should not be too difficult for those organisations that can perform face-to-face over-the-counter verification of the appropriate documents.
There is also recourse in the new legislation for electronic verification. Electronic verification of individuals requires verifying the name and address using two separate data sources and either the customer’s date of birth with an independent data source or verifying the customer’s transaction history for at least 3 years. Electronic verification of individuals appears to be problematic in Australia because of the lack of reliable independent databases on individuals.
AML is risk-based
It should be stressed that the Rules outline the minimum KYC requirements for low to medium risk customers. Reporting entities need to have an AML program in place that assesses the risk posed by customers.
The key to a risk-based Act is that the onus is squarely on you to assess the risk and take the adequate steps.
To meet the requirements of the risk-based approach we offer a range of products so that the details of customers with different risk profiles can be verified.
