KYC-Know Your Customer - Bosch Software Innovations

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KYC - Know Your Customer Bettina Kunz Content Introduction 2 What Information Is Contained In a KYC Profile? 3 For Which Customers Is a KYC Profile Created? 4 Administration of a KYC Profile 5 Use of Data from the KYC Profile 6 Endnotes 6 Introduction The term KYC – Know Your Customer – means that financial institutions such as banks and i nsurance companies are obligated to record information on their customers and to check the plausibility of the information entered. The basis for KYC is Article 8 of the 3rd EU Anti-Money Laundering Directive and, for Switzerland, Article 17 of the SFBC Money Laundering Directive. The KYC principle goes far beyond the simple identification process, such as using an identity card. The source of the asset and the funds that are utilized as part of the business relationship and/or transaction as well as their intended use also must be determined. In the event that the source of the asset(s) is not clear, an investigation must be c arried out that includes directly asking the customer. In cases of doubt, the customer must provide appropriate evidence of the legal validity of the asset(s). This information is stored as the “Know Your Customer” profile (KYC profile). Using appropriate software, KYC profiles can be ent ered, updated and administered. Complete electronic processing, documentation and historization means that the data can be called up quickly by other users, and all steps can be t racked individually after the event and m ade available to the internal audit department. The initial setup of a KYC profile involves some work. If the information to be recorded in the KYC profile is then used gainfully in another area (e.g., client relationship management), a financial institution achieves added value simply by complying with the requirements. Links to the Wording of the laws: 3. EU Anti-Money Laundering Directive (Article 8):http://www.bosch-si.com/fileadmin/pdfen/legal/directive_2005-60-EC.pdf SFBC Money Laundering Directive (GwV EBK) (Article 17) in German: http://www.boschsi.de/fileadmin/pdf/legal/955.022.de.pdf © Bosch Software Innovations GmbH 2/6
KYC – Know Your Customer What Information Is Contained In a KYC Profile? A KYC profile is an aggregate collection of information on a customer. This information is used to get to know the customer, and enables the financial institution to assess the customer's business operations, activities and the plausibility of all statements. As described in the introduction, the KYC profile contains much more information than the identity of the customer. This additional information is described in the following sections. Information On The Person A distinction is made with regard to the information collected between natural and juridical persons. In general, all readily available information such as name, country of domicile, customer number or customer account manager is transferred from the master data into the KYC profile. Individual In the case of individuals, the following additional information is recorded: � Occupation and/or business activity employed yes/no if yes: freelance or salaried, job details, industry sector, etc. if no: relevant details, e.g., housewife, pensioner or other; previous occupation, trainee, etc. � Purpose of the business relationship personal payment transactions, e.g., salary account, account for pension payments, etc. savings, investment or asset management other (more detailed description required) Business Entity In the case of business entities, the following information is recorded depending on the type of company: � For operating companies type of company, business activity, industry sector, industry sector code, number of employees, partners, ownership percentages expected level of turnover and payment transactions: level of receipts and payments, volume of cash transactions (receipts/payments) � For a domiciliary company (foundation, trust, etc.) purpose of the company (investment or asset management, estate administration or planning, tax optimization, etc.) countries with established links more detailed description of the purpose � Other business entities such as investment companies or institutional investors (pension funds, insurance companies, etc.) type, business activity and industry sector, etc. Origin and Source of the Asset Legislation requires appropriate actions be t aken in order to determine the source of the asset, and t he funds that are applied as part of the business relationship and/or transaction. In the event that the source of the asset is not clear, an investigation must be carried out that includes directly asking the customer. In cases of doubt, the customer must provide appropriate evidence of the legal validity of the asset. The following information is to be obtained: � Source of the assets commercial / freelance/ salaried work inheritance sale of investments sale of property other If possible, additional information is to be recorded on each sub point such as type and s ource of income, name of deceased, details of the investment, location of the real estate, etc. In an i deal situation, this information can be substantiated by appropriate documents and attached to the KYC profile as an electronic copy. It is also possible to specify in the KYC profile whether bank employees are able to inspect the document. � Amount of asset inflows to be expected on the opening of the business � Amount of assets to be deposited on a long-term planned basis � Expected account turnover per year (receipts and payments) � Type of asset receipt cash bank transfer (from which bank) transfer of securities account (from which bank) other (delivery of physical stocks, etc.) Beneficial Owner Information on the beneficial owners also belongs in a KYC profile. If this information is already recorded in the master data in another area, it can simply be imported into the KYC profile. If data on t he beneficial owners is not administered in another area, the relevant persons are recorded in the KYC profile. © Bosch Software Innovations GmbH 3/6
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KYC-Know Your Customer - Bosch Software Innovations

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