Financial Crime World

Know Your Customer (KYC) Procedure Explained: Strengthening Financial Regulations in The Bahamas

In a move aimed at bolstering financial regulations in The Bahamas, the “Know Your Customer” (KYC) rules have been outlined under the Financial Transactions Reporting Act and Regulation.

Key Situations Requiring Identity Verification

According to the law, there are four main situations where financial institutions must verify the identity of their customers or clients:

  • Verification before a new client establishes a facility or is added to an existing one
  • Verification of all clients in existence as of January 1, 2001
  • Verification of third parties involved in transactions over $15,000.00
  • Verification of customers conducting cash transactions above $15,000.00

Definition of a Facility Holder

A facility holder is defined as a person with whom there is a client-type relationship, receiving professional services consistent with business activities under the Financial Transactions Reporting Act.

Exemptions to Identity Verification Rules

Exemptions to these rules include:

  • Relieving financial institutions of identity verification obligations in certain circumstances
  • Permitting them to rely on verifications carried out by other financial institutions involved in the transaction

Evidence Required for Verifying Identity

The evidence required for verifying identity is outlined in the Financial Transactions Reporting Regulations.

Record-Keeping Requirements

Record-keeping requirements have also been established under the same act, including:

  • Transaction records
    • Must be maintained for at least five years to enable the FIU to reconstruct transactions
  • Verification records
    • Must be kept for at least five years after a customer ceases to be a facility holder
  • Wire transfer records
    • Must include information on:
      • Original source of funds
      • Ordering and final destination of funds
      • Names and addresses

Implementation Goals

The implementation of these regulations aims to enhance transparency and combat financial crimes in The Bahamas.