A well-designed compliance programme, integrated into your company’s business operations, covering your management of internal policy, general regulations and inhouse employee training. Through employing a compliance initiative and ensuring it’s standard practice across your organization, risk of violations will be mitigated and safeguarded against.
What is KYC?
Know Your Customer (KYC) is the term used for when a business carries out the appropriate checks on a prospective client, through a series of systematic checks and information gathering. The aim of this process is to prevent, detect and deter Money Laundering (ML) / Financing Terrorism (FT) risks in your business. Keeping a record and maintaining accurate reports on the organisation’s clients is a critical element to ongoing KYC conformity.
KYC is a global standard and is particularly prominent for certain industries who are required to conduct new and ongoing due diligence on their client base and activity. The processes of KYC are used to protect all stakeholders within the business from violations, which makes KYC a very important aspect and a key interest for investors and firms. For an effective KYC, a business needs to include a process of customer identification, risk profiling, customer acceptance, risk rating, monitoring, investigation and record keeping
What is AML/CFT?
Anti-Money Laundering (AML) is the term which is used to refer to the laws, practices and regulations that businesses have in place in order to prevent criminal activity and illegally obtained funds from being used and disguised as legitimate income. This practice of having policies in place for AML measures is becoming increasingly prevalent and strict for financial service providers and Designated Non-Financial Businesses and Professions (DNFBPs) to counteract funding of criminal activity and terrorism. The Combatting of Financing of Terrorism (CFT) is a set of government laws, regulations, and other practices that are intended to restrict access to funding and financial services for those whom the government designates as terrorists. By tracking down the source of the funds that support terrorist activities, law enforcement may be able to prevent some of those activities from occurring.
What is a DNFBP?
A Designated Non-Financial Business and Professions (DNFBP) is a compliance categorisation for companies which must uphold a higher scrutiny over their compliance requirements.
DNFBPs are obliged to assess and to understand the ML/FT risks to which they are exposed, and how they may be affected by those risks.
Companies seeing increased governing and responsibilities, with regards to compliance, are those involved in insurance, banking, other financial institutions and other DNFBPs including:
- Lawyers, notaries, and other legal professionals
- Auditors and accountants
- Company and trust service providers
- Dealers in precious metals and stones
- Real estate agents and brokers
The increased scrutiny necessary for operating within these activities calls for heightened KYC, Due Diligence (DD) and AML checks and measures.
Why is AML important?
Money laundering and the financing of terrorism are crimes that threaten the security, stability and integrity of the global economic and financial system, and of society as a whole. Combatting money laundering and the financing of terrorist activities is therefore an urgent priority in the global fight against organised crime.
The UAE is deeply committed to combatting money laundering and the financing of terrorism and illegal organisations. To this end, the Competent Authorities have established the appropriate legislative, regulatory and institutional frameworks for the prevention, detection and deterrence of financial crimes, including ML/FT.