Know Your Customer, or KYC, refers to the process that regulated businesses and financial institutions undertake to verify and gather information about their clients or customers. KYC procedures are a crucial component of anti-money laundering (AML) and counter-terrorism financing (CTF) efforts, as they help identify and mitigate the risk of financial crimes.

The primary objectives of KYC are to establish the identity of customers, assess their suitability for a particular product or service, and understand the nature of their financial transactions. By conducting KYC, businesses can ensure compliance with regulatory requirements, protect themselves from potential risks, and maintain the integrity of their operations.

KYC typically involves collecting various types of information from customers, including personal identification details (such as name, address, date of birth), proof of identity (such as government-issued documents), and additional information depending on the risk profile of the customer. This information helps establish the customer’s identity, assess their risk level, and identify any suspicious activities or potential red flags.

The KYC process may also involve screening customers against sanction lists, politically exposed persons (PEPs) databases, and adverse media sources to identify any association with financial crime, corruption, or illegal activities.

The level of KYC procedures can vary depending on factors such as the nature of the business, the jurisdiction, and the risk level of the customer. In some cases, businesses may need to conduct enhanced due diligence (EDD) for high-risk customers, which involves gathering additional information and conducting more extensive background checks.

In today’s increasingly interconnected world, business transactions that were traditionally conducted face to face now take place through email or with a few simple clicks. Although this convenience benefits clients, it places a greater responsibility on companies to safeguard their integrity and protect themselves from money launderers, criminals, and other unscrupulous individuals.

Generally, the compliance regulations pertaining to anti-money laundering (AML) and the prevention of financing terrorism (CFT) have presented numerous challenges in Malta. As Fairwinds Management is a fully licensed and regulated corporate services provider and accountancy firm, it is essential for us to uphold the highest standards of integrity in all aspects of our work. We prioritise trust and understanding in our client relationships, which includes strictly adhering to rigorous due diligence policies and procedures. Additionally, our team undergoes comprehensive training on anti-money laundering and counter-terrorism financing risks. By implementing our own KYC policies and procedures, we not only protect ourselves but also safeguard the interests of our clients.

Before accepting a new client, we request a specific set of KYC documents. This process is also done on an annual basis to ensure all our records are up to date and as part of the continuous risk monitoring which is of utmost importance in identifying new risks for businesses and professionals. Risk assessments play a crucial role in detecting whether a business or professional is susceptible to money laundering activities.

While the process of gathering and submitting these documents may seem inconvenient to some, it is an integral part of our work. We strive to know and understand our clients fully, and maintaining our impeccable reputation requires strict adherence to applicable regulations. The fact that we request these documents and guide our clients through this procedure should be seen as a vote of confidence in our commitment to following the rules and treating your work and our relationship with the utmost seriousness.

Fairwinds Management Limited is a MFSA licensed firm offering Business Solutions in Malta. As part of our services, we offer Accounting, Administration, Corporate and Legal solutions.  Fairwinds Management also manages the brand Accounting Services. More information about us and our key services please visit our website. You may reach Fairwinds Management on +356 2704 0903 or info@fairwindsmanagement.net.

Article written by Ms Charlene Sciberras, B.A. (Hons), guest writer, a marketing and business administration specialist with a special focus on corporate, accounting, and legal matters.