KYC Refresh

Step 3: Study of Customer’s Banking Information

Where a customer banks is an important indicator of high risk activities such as money laundering and terrorist financing. While sanctions lists may be generic to a country, there is also a lot of information about which specific financial institutions are prone to undesirable transactions.

Banking in a sanctioned country can be less worrisome if the account is held in an institution of international repute. However, the reverse could also be a cause for concern. Since banking is a more global phenomenon, the big picture should always be consulted during KYC Refresh.

Known Accounts and Prior Reviews

Salient Features:

  • Financial Institution Name
  • Account Number, Type, Date Opened and Status
  • Location
  • High Risk Jurisdiction? Consistent with Business? Other?
  • Completed Case Reviews since Last Review
  • Number of Current Active Cases
  • Number of escalations for ME throughout banking relationship
  • Number of escalations for ME since last review
  • Number of CTRs on the ME since the last review
  • CTR activity consistent with ME’s Business Profile

Similar to the first section, this is primarily used as a review section to determine the accounts held by the entity up to the time of the previous review. By identifying whether the accounts belong to high risk jurisdictions, investigators have a tentative map of the structure of the organization. It also informs them on whether to delve deeper into transactions.

Additionally, this section also takes into account prior escalations and active case reviews against the entity. However, it is important to note that based on the structure and the nature of the business, some organizations may be involved in structured cash handling activities. In such cases, there may not be much to investigate but it’s always important to keep an eye out.

Most of the information in this section is derived from internal databases and customer responses to previous questionnaires.

Updated Banking Information

Salient Features:

  • Financial Institution Name
  • Available Account Information
  • Location
  • High Risk Jurisdiction? Consistent with Business? Other?

The KYC Refresh review relies on databases and tools such as LexisNexis and extensive internet searches to gather information regarding financial ties of entities and individuals in other countries.

Highlights in this section include the High-Risk identification of certain jurisdictions and understanding the importance or necessity for the business to function in those areas. For example, if a logistics entity has expanded their interests to China and Dubai and subsequently begun banking in these states, the investigator might be alerted to risky banking.

While Dubai and China are far apart in the eyes of the investigator (since Dubai is considered high-risk and China is not), he has to also consider the fact that it makes sense for the business to operate in these countries. However, if the same entity begins banking in a low import/export economy of a high risk jurisdiction, the red flag raised could be cause for greater concern.

Resources & Findings

If the investigator finds cause for concern after retrieving relevant information from databases and third-party providers, he can raise a questionnaire for the client to furnish additional, updated information.