How To Set Up A Successful AML Compliance Programme Part 2

In this three-part series, we will be summarising the steps you need to take to set up a successful AML compliance programme for your business.

This series is meant to help Lawyers, Accountants, Real Estate Agents and Financial Services subject to the AML/CTF Act. This guide is designed for anyone in the organisation involved in the AML/CTF Compliance Programme.

If you’d like to go straight into the thick of it, you can download the complete guide for free here!

Last week, we covered Part 1, where we talked about the first three things you have to consider when setting up your AML compliance programme. This week, we'll be talking about Step 4 of the process which is Customer Identification and Due Diligence.

4. Customer Identification and Due Diligence

Once you set up your AML/CTF Compliance Programme, you’ll need to implement a process for managing KYC to meet your ongoing obligations. Your Customer Identity Procedures (KYC) should be documented in Part B of your compliance programme. KYC is the process where you verify the identity of your clients before or during your dealings with them. Essentially, KYC is ensuring your clients are actually who they claim to be. This may be either individual clients or complex entities (such as companies, trusts and partnerships). For this part of the process, you will need to collect the following records:

Beneficial ownership

A beneficial owner is an individual who ultimately owns or controls an entity such as a company, trust or partnership (with 25% share of the entity or more). When verifying an entity such as a company, all beneficial owners must be verified.

Electronic Identity Verification (EIV)

In order to conduct KYC, you need to do EIV checks on your customers. EIV is a software designed to confirm and validate the details of your customers' identity. It inspects their ID document (eg. passport, driver licence) against national databases, such as the Australian DVS (Document Verification Service), to confirm it is valid.

Identity Document (ID)

You must collect your customer's full name, and either their date of birth or address to verify their identity.

PEP check

A PEP screening will also be conducted against your customers' information. PEPs are defined as individuals with high profile political roles, or people who have been entrusted with a prominent political function. It is important to note that even though there could be a higher risk of being involved in money laundering and/or terrorist financing due to the conspicuous positions they hold, PEP status does not automatically predict criminal behaviour, and that all monitoring requirements are simply preventative in nature.

Source of Wealth

Source of Wealth refers to the origin of an entity's assets. This could be monetary assets, property or gifts and loans. By verifying this information, it gives you an insight into the amount of wealth that customer is expected to have, how it is acquired, and you can be assured of the legitimacy of the wealth held by the customer. You can find detailed elaboration of the points above and more in the Complete Guide to Setting Up a Successful AML Compliance Programme. Download it for free today and be on your way to setting up a successful compliance programme for your business.