Kyc Process Explained in Bhutan: A Simplified Guide for Foreign Institutions

Introduction

In today’s globalized business world, compliance with Know Your Customer (KYC) regulations is crucial for financial institutions. KYC refers to the process of verifying the identity of clients and ensuring they are not involved in money laundering or terrorist financing activities. This article provides a simplified guide for foreign financial institutions regarding KYC procedures in Bhutan.

Background

Bhutan, a landlocked country in South Asia, has seen an increase in foreign investment. The government, in accordance with international standards, has implemented KYC regulations for financial institutions operating within its borders.

KYC Basics

• Customer Due Diligence (CDD)

  • Assessing the risk of doing business with a specific customer
  • Based on factors like customer identity, business nature, purpose of transaction, and country of origin

• Customer Identification

  • Verifying a customer’s identity through documents like passports or national ID cards

• Ongoing Due Diligence (ODD)

  • Monitoring transactions for suspicious activity
  • Updating customer risk assessments as new information becomes available

Procedures in Bhutan

Customer Identification

• Customers must provide identification documents such as passports or national ID cards.
• Financial institutions must keep a record of identification document numbers and the dates they were provided.

Risk Assessment

• Financial institutions must follow an international standard risk assessment process.
• Assessment should consider the customer’s country of origin, business nature, and purpose of transactions.

Ongoing Due Diligence

• Monitor transactions for suspicious activity.
• Update customer risk assessments as new information becomes available.

Reporting Suspicions

• Financial institutions must report any suspicions of money laundering or terrorist financing to the Bhutanese Financial Intelligence Unit (FIU).
• Reports should include the identification document number of the customer, the transactions involved, and any other relevant information.

Conclusion

KYC regulations are necessary to prevent money laundering and terrorist financing activities. For foreign financial institutions operating in Bhutan, understanding these regulations and procedures is essential. By following these guidelines, they can ensure compliance, protect their reputation, and avoid potential legal consequences.