Financial Crime World

Client’s Customers: Unveiling the Identity

Verifying the identity of customers is a crucial aspect of any business transaction. In today’s digital age, this process has become more complex and stringent than ever before. As a responsible business entity, it is essential to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations.

Proof of Identity: The Starting Point

Any government-issued identity document that can be used to identify an individual is considered proof of identity. This includes documents such as:

  • Passports
  • Driver’s licenses
  • National cards

However, the requirements for identity verification may vary depending on the jurisdiction and industry.

Enhanced Due Diligence: A Deeper Dive

Enhanced due diligence (EDD) is a more rigorous approach to verifying customer identities. It involves screening customers against:

  • Watchlists of global regulatory authorities
  • Foreign and domestic databases
  • Politically exposed persons (PEPs)
  • Sanctioned individuals

This process helps businesses mitigate higher risks associated with certain customers.

Third-Party Services: A Convenient Option

In the absence of explicit regulations, clients may choose to rely on third-party services for fulfilling AML/KYC obligations. However, it is essential to note that:

  • The client will remain liable for maintaining regulatory compliance and fulfilling AML/KYC obligations.
  • The client must collect all necessary information (Due Diligence Data) from the third party without undue delay.

Record Retention: A Critical Requirement

As per Iraq’s Act, businesses are required to retain data for not less than five years. This information forms part of their AML and KYC obligations for due diligence.

Timing of Verification: A Continuous Process

Identity verification is not limited to a one-time, one-instance process. In fact, it is required in multiple instances as per regulations. The application and choice of when to deploy identity verification procedures depend on the client’s requirements and conveyance to Shufti Pro.

Conclusion

Verifying the identity of customers is a critical aspect of any business transaction. By understanding the requirements for:

  • Proof of identity
  • Enhanced due diligence
  • Third-party services
  • Record retention
  • Timing of verification

businesses can ensure compliance with AML and KYC regulations and mitigate potential risks associated with certain customers.