Financial Crime World

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Malta’s Know Your Customer (KYC) Regulations: A Compliance Guide for Businesses

The concept of Know Your Customer, or KYC, has gained widespread attention in recent years as a crucial component of Anti-Money Laundering (AML) regulations. However, merely knowing your client is not enough; businesses must also take steps to ensure that the customer does not pose a high risk.

What is KYC?

KYC, which stands for Know Your Client, is a due diligence process designed to gather information about a business entity’s customers in order to establish a safe and confident business relationship. This procedure is typically used to assess customer risk and comply with various AML laws by identifying potential money laundering and terrorist financing risks.

The KYC Process

The KYC process involves three main steps:

1. Customer Identification Programme (CIP)

  • The CIP step begins during the onboarding process, where clients are required to submit:
    • An onboarding form
    • A Politically Exposed Person (PEP) declaration form
    • A true certified copy of their identification or passport
  • However, passports do not include residential addresses, so subject persons must request a utility bill issued within the last six months to verify the client’s residential address.
  • The final document requested at this stage is a company organigram to better understand the company’s structure.

2. Customer Due Diligence (CDD)

  • CDD is a process designed to mitigate potential risks posed by clients, whether they are natural persons or legal entities.
  • Most entities use a Risk-Based Approach (RBA), which assesses the level of risk.
  • As part of the RBA, subject persons use a Customer Risk Assessment (CRA) to determine whether the customer poses a low, medium, or high risk.

3. Ongoing Monitoring

  • The final stage of the KYC process is ongoing monitoring, which involves:
    • Reviewing financial transactions and accounts based on the client’s risk profile.
    • Maintaining both onboarding and existing customers and ensuring compliance with KYC regulations.

How GCS Malta Can Assist

At GCS Malta, our experts can ensure that your KYC checks are accurate and efficient, saving you from unnecessary hassle. Contact us today to learn more about how we can assist you in navigating the complexities of KYC regulations in Malta.