Know your customer: KYC Reports

kycKnow Your Customer or KYC is the part of due diligence that primarily deals with the verification of customers which includes checking personal and professional details in order to protect your company from people involved in financial crimes. KYC Report would yield negative news, hits on Sanctions lists, watch lists, PEP lists, identify hidden ownerships or involvement in money laundering, fraud, tax evasion, bribery, financial terrorism and other crimes about your customers and their associates. A KYC analysis is essential as per Money Laundering Directives to avoid getting fined or suffer reputational damages or even imprisoned due to non-compliance.

A professional KYC tool allows you to uncover the necessary background information on companies and individuals through valid databases via a single platform that provides you with comprehensive analysis and detailed reports in a matter of seconds.

Companies are expected to meet these risk and compliance requirements in an environment in which budgets and resources are under pressure and new opportunities to create more efficient business processes are being searched for.

Preventing money laundering
Third party entities have to be verified and beneficial owners as well as politically exposed persons (PEPs) should undergo specific due diligence checks.

Preventing bribery and corruption
Regulator authorities expect companies to implement effective third party due diligence practices to reduce the risk of bribery and corruption. Third parties include sales agents, joint venture partners, resellers and more.

Following sanctions
Companies have to follow national and international sanctions regimes. Traditionally, this part of the screening process is associated with the financial sector but is now also more and more important for the corporate sector.

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KYC Compliance Requirements

The Financial Crimes Enforcement Network (FinCEN) of the United States has established some basic KYC criteria in combination with the due diligence program's fundamental needs. Financial institutions are obligated to perform deeper risk evaluations of their clients' risk profiles in order to avoid money laundering.

FinCEN needs financial institutions to verify the names of their clients and their beneficial owners, who possess a minimum of 25% of the company. Additional examination is necessary for businesses with a significant anti-money laundering and terrorist funding (AML) risk.

When building a client risk profile, FinCEN needs financial institutions to determine the kind and purpose of the customer relationship. When a client relationship is established, a risk profile is built and utilized as a baseline for spotting suspicious activity.

Financial institutions must keep the client information up to date and correct, and continue to monitor their accounts for suspicious or unlawful activity. In case any unlawful activity is discovered, they need to the results.

Financial institutions must ensure that when they employ third parties to gather and verify client profiles, the third party uses specified risk controls and has a proper governance structure. They must get AML and customer identification program (CIP) certifications from a third party each year to remain in compliance.

Components of KYC

KYC has three components to create and run a KYC program successfully:

Customer Identification Program (CIP)

How do you find out if someone is actually who they claim to be? With identity theft on the rise, anyone who does financial transactions is required by CIP to have their identification confirmed. Based on its risk profile, every financial institution has its CIP procedure. Therefore, depending on the organization, a consumer may be requested for various information like driver's license, passport, Government-issued business license, and partnership agreement.

Customer Due Diligence (CDD)

One of the first analyses made by any financial institution is whether or not a new client is reliable. Customer due diligence is an essential element that requires financial institutions to conduct extensive risk assessments to protect against criminals, terrorists, and theft. The three stages of customer due diligence include Simplified Due Diligence (SDD), Basic Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD).

Continuous Monitoring

It is not enough to check your clients once; financial institutions must have a program to keep the clients in check on a regular basis. The continuing monitoring program oversees financial activities and accounts for a risk-based, dynamic approach to KYC.

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Know Your Customer Reports

Lexis® KYC Report-Standard report

The reputation of the people and companies you choose to work with can directly affect your business and brand.

  • Detailed information about the company: corporate structure, activities, contact information, number of employees.
  • Shareholder information, members of the Board of Directors, officials, and managers.
  • Commercial activities of the company, business partners, financial information, accounting statements.
  • Financial risk assessment.

Lexis® KYC Gold Report - Expanded report

Doing business with someone who is or has been compromised in corruption cases can be a real financial and reputational risk.

  • All the information that's in the KYC Report
  • Government and political ties: vetting the company,  shareholders, and directors against PEP lists
  • Checking the company against the sanctions list and other watch lists
  • Media monitoring for negative news coverage
  • Litigation database: review of local and global judicial databases.

Lexis® KYC Platinum Report - Premium Report

We collect data and create reports on companies anywhere in the world.

  • All the information that's in the KYC Report + KYC Gold Report
  • Site monitoring
  • Tenders
  • Telephone discussion with company representatives
  • M & A history
  • Market analysis of similar companies (up to 3 companies)

Lexis® Check Person - Individual vetting

  • Personal information
  • Address
  • Biographical information
  • Business connections and core activity
  • Solvency (credit history, bankruptcy)
  • Property ownership (shares, real estate)
  • Loans, assets, history of criminal cases
  • Media monitoring for negative news coverage
  • Checking against sanctions and PEP lists

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