Know Your Client: The Consequences Of Non-Compliance

Increasingly stringent regulations are putting greater demands on companies to have a deep understanding of those they do business with. For those active in the financial services sector, it is essential to carry out due diligence on clients to verify their identity, fraud, money laundering and terrorist financing.

Besides local obligations, there are international regulations such as Anti-Money Laundering (AML), the Alternative Investment Fund Managers Directive, the Foreign Account Tax Compliance Act and the Common Reporting Standard.

It's not enough to conduct a few cursory checks before you on-board a new client. A comprehensive knowledge of the customer is essential, especially in identifying people who are the subject of sanctions, or Politically Exposed Persons, or those who may be high risk to customers and stakeholders.