Financial Crime World

Spain’s KYC Process: An In-depth Look at Identity Verification and AML Regulations

Spain’s Know Your Customer (KYC) process is a critical component of the country’s financial regulatory framework, designed to prevent money laundering and terrorist financing. It is essential for Spanish financial institutions when onboarding both domestic and international customers.

Identity Verification for Individuals

  • Document Verification: For Spanish individuals, presenting a valid national identity document is a must. This document includes their name, photograph, and a verification of the back of the photo.
  • Electronic Signatures: Spain’s electronic signature laws allow for digital signatures, making the process more efficient. The relevant AML laws and regulations have been effective since 2010.

Identity Verification for International Applicants

  • National Identity Cards or Passports: International applicants need to provide national identity cards or passports which include their full name, photograph, and document number.

Identity Verification for Corporations

  • Specific Information Requirements: Spanish regulators require firms to obtain specific information, such as the regulatory form and number, business address, and professional activity.
  • Identifying Beneficial Owners: The Spanish approach to beneficial ownership is two-fold. Firms must establish the identities of the beneficial owners, particularly if they are other corporations or trusts.

Enhanced Due Diligence Measures

  • Correspondent Banking and Private Banking: Enhanced due diligence measures are necessary in cases of correspondent banking, private banking, and transactions where anonymous activity is possible.
  • Requesting AML Questionnaires: Firms need to request AML questionnaires from correspondent banks and maintain a vigilant eye on potential risks.

Politically Exposed Persons (PEPs) and Correspondent Banking Relationships

  • Additional Scrutiny: PEPs and correspondent banking relationships require additional scrutiny, and the law outlines specific due diligence and monitoring requirements.

##Transaction Monitoring and Reporting Suspicious Activity

  • Monitoring and Reporting Transactions: Transaction monitoring, including Suspicious Activity Reports (SARs), falls under the jurisdiction of SEPBLAC.
  • Regular Reports: Financial institutions are responsible for reporting transactions exceeding EUR 3,000 to the regulatory body, making it a critical component in Spain’s fight against financial crimes.

Conclusion

Spain’s KYC process is rigorous and in line with global financial regulations. Its two-tier e-signature law allows for flexibility and customization in various business scenarios while ensuring transparency and security. Financial institutions must adhere to these guidelines and be prepared to provide regular external reports on their AML systems and controls.