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Customer Due Diligence: Guide to KYC, CFT, AML Singapore

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With highly regulated financial institutions in Singapore, routine KYC, CFT, and AML checks must be performed by any business engaging in fund services to prevent money laundering, terrorism financing, fraud, and other illicit activities.

For those not familiar with or just starting out in this industry, KYC, CFT, and AML are part of the Customer Due Diligence process where pertinent information of a customer’s profile is collected and evaluated for potential money laundering risk.

KYC refers to the process of verifying the identity of your customers, either before or during the time that they start doing business with you. The term also references the regulated bank customer identity verification practices to assess and monitor customer risk. This process is also a legal requirement intended as an anti-money laundering (AML) measure.

Customer Due Diligence – The importance of KYC

KYC is a standard business practice within the investment industry. It is also required during fundraising and M&A projects. The checks protect all stakeholders involved, and the business interests of companies, investment firms, and investors, especially if there is a lot of money at stake. If a business or issuer complies with KYC policies, they will reduce the financial risks of their business arrangements with particular clients. 

Many seasoned investors see KYC checks as a necessary process that builds trust and mitigates risk. Although these rigorous checks can be burdensome, they create a secure and trustworthy environment to enable financial or investment activities. It reassures clients that they are working with a legitimate company.

What is involved in KYC checks?

The exact list of documents and background checks varies, depending on your client demographics, business-specific risk appetite, as well as expected volume. Minimally, it involves:

  • Collection and verification of identification documents

For companies: Certified Articles of Incorporation and Government-Issued Licences

For individuals: Passports (or acceptable equivalents)

  • Screening of companies, groups, and individuals against the appropriate AML/CFT sanction lists via a reputable commercial database

  • Checking against Politically Exposed Persons (PEP) names, lists, and their affiliates

  • Determining the risk associated with the relevant individuals/groups/companies being investigated based on your internal parameters, as well as the results of the searches made

For deals that involve larger sums of money or a higher level of risk, a more thorough check is needed. KYC service providers can be tasked to look into:

* The source of your clients’ income 

* Your clients’ ability to invest in your market 

* Your clients’ complete financial portfolio, credit profile, and background

At the end of a KYC check, you should receive reports presented in relevant formats for record retention, audits, and regulatory inspections. This check must be vital to your risk management policy to avoid business relationships with clients who have participated in shady or illegal activities.

Conducting KYC & AML Singapore checks with Lanturn

Our KYC & AML checks are broken into 2 tiers, which are: 

Basic

Information obtained to verify the identity of potential/existing clients, shareholders, and investors.

Enhanced

This is for higher-risk customers, where a deeper understanding of the target individual/entity’s activities is needed to mitigate associated risks. 

If you have low-value accounts, and they are high-volume, we recommend working with an e-KYC provider instead.

All our services include:

– Collection and verification methods that comply with Data Protection regulations 

– A four-eyes quality check for all documents/information collected;

– Secure digital record-keeping 

Of course, the risk profile of your stakeholders has the potential to change over time. If you are subscribed to our “Outsourced Compliance Monitoring & Support” services, we will conduct KYC reviews of your shareholders and investors on a 6-monthly basis.

Whether it’s KYC, incorporation, or fund management services, our team at Lanturn is more than willing to help you!

Reach out to us to learn more about how we can help you grow your business today!

 

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