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Staying On Top Of AML And Knowing Your Customer Requirements Is Important

The AML/KYC laws governing financial institutions have evolved rapidly over the last few years. It is especially true for social media and digital platforms such as Facebook, Twitter, Instagram, etc. To stay on top of this rapidly changing landscape, knowing how these new regulations impact you is essential. It is why, when working with any institution, it is essential to know your customer requirements. As new regulations are implemented, and older requirements are rescinded, firms will need to stay on top of regulatory changes and know which requirements are still applicable.

What are Know Your Customer requirements?

The purpose of financial institutions is to ensure that they are correctly following AML and KYC crypto requirements. Know Your Customer (KYC) is the requirement that financial firms must be able to identify their customers on a per-transaction basis. It includes knowing which individuals have ownership interests in the accounts and any additional beneficial owners, beneficiaries, or signatories.

Importance of Staying on Top of AML and Knowing your Customer Requirements

1. Being Aware of the Risks

Staying on top of AML and KYC requirements is essential because financial institutions will need to identify a customer’s risk profile. It includes knowing if there is a heightened risk for money laundering or terrorism financing. Financial institutions that are not aware of their customers’ risks could make it easier to commit financial crimes.

2. Avoiding Fines

As with any industry, financial institutions must stay on top of the latest regulations and requirements. Failure to do so could cost a financial institution a hefty fine. As of December 2016, The Financial Services Authority in the United Kingdom (FSA) has fined over £6.3 million for AML and KYC issues. Penalties of this magnitude could quickly put smaller financial institutions out of business. Financial institutions can ensure that all regulations are met by knowing their customer’s requirements and avoiding fines.

3. Benefiting from New Business Opportunities

Now more than ever, financial institutions are reliant on new business opportunities. As technology continues to evolve and sophisticated financial crime methods continue to be developed, it is becoming increasingly important for firms to stay on top of the latest AML and KYC regulations. Failure to do so may result in financial institutions unable to identify or adequately monitor suspicious activity. By staying on top of this changing landscape, financial institutions can ensure they adequately identify their customers and stay compliant with AML/KYC regulations.

4. Knowing which Requirements Apply to you

As new AML/KYC regulations are implemented, or older ones are retired, financial institutions need to know how they apply. It includes which requirements are still applicable and have been retired or rescinded. By knowing what is mandatory and what is not, financial institutions will be able to ensure that they stay compliant with all current regulations. It saves them fines, but it could also help them offer better services to their customers.

It is imperative to know your customer requirements when working with financial institutions. As regulations evolve and the AML/KYC landscape continues to change, financial institutions need to be aware of how these new changes impact their customers. By staying up-to-date on the latest AML/KYC requirements, financial institutions can ensure they are appropriately identified and monitored and ultimately avoid fines.