MORNBFI Vol. 1 - Planters Development Bank

APP. Q-23-c08.12.31ensure that all relevant information isobtained as quickly as possible. In addition,the supervisor needs to set an appropriatetarget date for completion of a KYC reviewand regularization of all existing accounts.In any event, a QB should undertakeregular reviews of its customer base toestablish that it has up-to-date informationand a proper understanding of its accountholders’ identity and of their business.QBs that offer private banking servicesare particularly exposed to reputationalrisk. Private quasi-banking by natureinvolves a large measure of confidentiality.Private quasi-banking accounts can beopened in the name of an individual, acommercial business, a trust, anintermediary or a personalized investmentcompany. In each case reputational riskmay arise if the QB does not diligentlyfollow established KYC procedures. In nocircumstances should private quasi-bankingoperations function autonomously, or as a“QB within a QB” 1 , and no part of the QBshould ever escape the requiredprocedures. This means that all new clientsand new accounts should be approved byat least one person other than the privatequasi-banking relationship manager. Ifparticular safeguards are put in placeinternally to protect confidentiality of privatequasi-banking customers and their business,QBs must still ensure that at least equivalentscrutiny and monitoring of these customersand their business can be conducted, e.g.,they must be open to review bycompliance officers and auditors.2.1 General identification requirementsQBs need to obtain all informationnecessary to establish to their fullsatisfaction the identity of each newcustomer and the purpose and intendednature of the business relationship. Theextent and nature of the informationdepends on the type of applicant (personal,corporate, etc.) and the expected size ofthe account. National supervisors areencouraged to provide guidance to assistQBs in their designing their ownidentification procedures. Examples of thetype of information that would beappropriate are set out in Annex Q-23-c-1.QBs should apply their full KYCprocedures to applicants that plan totransfer an opening balance from anotherFI, bearing in mind that the previousaccount manager may have asked for theaccount to be removed because of aconcern about dubious activities.QBs should never agree to open anaccount or conduct ongoing business witha customer who insists on anonymity or“bearer” status or who gives a fictitiousname. Nor should confidential numbered 2accounts function as anonymous accountsbut they should be subject to exactly thesame KYC procedures as all othercustomer accounts, even if the test is carriedout by selected staff. Whereas a numberedaccount can offer additional protection forthe identity of the account-holder, theidentity must be known to a sufficientnumber of staff to operate proper duediligence. Such accounts should in nocircumstances be used to hide thecustomer identity from a QB’s compliancefunction or from the supervisors.QBs need to be vigilant in preventingcorporate business entities from being usedby natural persons as a method of operatinganonymous accounts. Personal assetholding vehicles, such as internationalbusiness companies (IBCs), may makeproper identification of customers orbeneficial owners difficult. A QB shouldtake all steps necessary to satisfy itself thatit knows the true identity of the ultimateowner of all such entities.1Some QBs insulate their private quasi-banking functions or create Chinese walls as a means of providing additionalprotection for customer confidentiality.2In a numbered account, the name of the beneficial owner is known to the QB but is substituted by an account number orcode name in subsequent documentation.Q RegulationsAppendix Q-23-c - Page 2Manual of Regulations for Non-Bank Financial Institutions