Know your customer

The new money laundering regulations, which came into force in the UK on 1 March 2004, aim to combat not only money laundering but other financial and organized crime, such as drug dealing and terrorism. The regulations require all businesses handling large sums of money to report to the authorities any transactions they regard as suspicious. A central theme of the regulations is the need to carry out what are termed ‘Know Your Customer’ (KYC) checks on any new client or customer. Professionals must now carry out more checks than ever before on new customers, including both individuals and organizations, and the checks must be renewed on a regular basis. The checking process can be made more efficient and effective by automated information systems and databases, such as those developed by Bureau van Dijk Electronic Publishing (BvDEP), which can greatly reduce the time taken to investigate company ownership structures and obscure shareholding patterns. The processes involved in such KYC checking are described and attention is drawn to such issues as: company complications, where BvDEP’s AMADEUS system is ideal for banks or companies looking to strengthen and streamline its KYC procedures; company ownership, where BvDEP’s ownership data, accessible via its INVIEW, NOMINUS, ORBIS and Independence Indicator databases, can be valuable; and mergers/acquisitions data, where information can be provided by ZEPHYR, BvDEP’s global deals database. The author concludes that adequate KYC information, combined with monitoring, allows professionals to make judgments about whether an activity or transaction is suspicious and helps them to comply with reporting obligations.