Special Case Study: Customer Identification Process For A Legal Person

This article elaborates on ‘Special Case Study: Customer Identification Process For A Legal Person’.

Verification of a corporate entity means using the appropriate KYC measures, to ensure that the identification information including the constituent documents is received, as identification information and performing some other due diligence measures, to check the business details and activities of the entity. Such identification and verification of the entity is a foundational element of anti-money laundering and anti-terrorist financing regime. KYC helps to know the entity and to assess ML/TF risks that may be associated with the transactions or activities.

Customer Identification Process For A Legal Person

Case Study: Customer Identification Process For A Legal Person

ABC Limited is a listed entity listed on the New York Stock Exchange and is involved in the business of selling clothes to the whole sellers in the United States. Mr. A is the CEO of ABC Limited and is a United States national. The board of directors of the company comprises members from the United States, and the company is not owned by any other company or group of companies. 

Mr. A approaches the ABC Bank in the United States as a principal officer to open the company bank account. 

The account opening officer of the bank asks for opening the bank account and the expected revenue or funds to be credited.

The account opening officer of the ABC bank asks for the following minimum documents, initially from Mr. A (CEO):

  • Mr. A’s National ID Card;
  • recent Photograph;
  • employment details including the current Salary Slip;
  • national Tax Number of the ABC Limited;
  • details of Board of Directors;
  • constituent documents of the ABC Limited, such as Articles of Association, Tax Information;
  • business address, and contact details that are registered, with the registrar of the companies;
  • details of Beneficial Owner;
  • jurisdiction in which the company operates;
  • financial information of the company.

Account opening verification processes

The account opening officer needs to identify and verify that the information provided is authentic, valid, and current. The company’s name, address, and the names of directors are to be searched from a publicly accessible database, such as a provincial or federal database, or a corporation search and registration service through subscription. 

The account opening officer performs the due diligence measures and performs screening of the company name in the OFAC list and other negative lists maintained. The identity of Mr. A is also verified, and the name is checked in the negative lists. It is also determined if the entities or natural persons have an ownership stake, either through direct ownership or through another party.

The account opening team performs the scrutiny of the constituent documents provided and visits the website of the company for the registered address details mentioned. The details of the company are also checked from the listing of the Stock Exchange to  calculate the total ownership stake, or management control, of any natural person and determine if it crosses the threshold for UBO reporting.

Reviewing of Financial Statements

Financial statements are reviewed and cross-referred to the business details provided to the account opening officer. Negative media searches are performed for the company, the CEO, and the Board members. 

Finally, based on the performance of the due diligence measures, ABC Bank opens the company account in the name of the company.

Final Thoughts

Customer verification process is very important to ensure that the identification information including the constituent documents is received properly to check the business details and activities of the entity. This article elaborates on ‘Special Case Study: Customer Identification Process For A Legal Person’.

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