KYC — Know Your Customer Solutions
Why do you need KYC norms or due diligence?
This one’s pretty simple. To prevent money laundering, to protect an institution from legal, financial, reputational and other risks, and to protect the overall integrity of banking and non-bank financial institutions’ (NBFIs) systems. Financial systems do not exist in a silo, as evidenced by the domino effect seen with the breakdown of financial systems and their collective integrity at various points in the world’s history, most recently a decade ago, with the global financial crisis.
Some years ago, the FATF (Financial Action Task Force), an independent inter-governmental body that develops policies to protect the global financial system against money laundering and terrorist financing, produced a report that focused specifically on the vulnerabilities of the casino and gaming sector when it came to both issues, and made a series of recommendations that needed to be put in place to try and prevent both money laundering and the financing of terrorism through casinos. The FATF recommendations are recognized as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard.
Many regulatory and law enforcement bodies have also stressed the need to prevent “smurfing” or the distribution of a large amount of cash into a number of smaller transactions in order to minimize suspicion and evade threshold-reporting requirements.
The FATF report stated that while money launderers will often structure their transactions to avoid financial institutions filing reports to authorities, it has been found that some money launderers using casinos have the opposite strategy and seek to trigger a cash transaction report to further authenticate a transaction, by resorting to activities like smurfing.
Shortly after 9/11, the U.S. Congress enacted the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (more commonly known as the USA PATRIOT Act). Among other things, the USA PATRIOT Act established a number of new measures to prevent, detect, and prosecute those involved in money laundering and terrorist financing. It was vital to our collective national interest to know the source of funds.
In 2003, a few things happened: Currency dealers/exchangers were required to file Suspicious Activity Reports; Customer Identification Programs began to be required for most financial institutions; and casinos and card clubs were required to file SARCs too (including those operating on tribal lands).
How is Biometrica relevant to all this?
Our products, modules, systems and solutions give organizations the tools to help prevent money laundering, keep track of transactions, and create incident logs.
Our products also provide financial services organizations with the ability to quickly verify identities of individuals, check documentation and the validity of that documentation, and provide any available conviction/arrest history of a potential licensee in operational real time, thus helping protect these institutions from legal, financial, reputational and other risks, and helping protect the overall integrity of banking and non-bank financial systems.
You, as a provider of a financial service, whether a bank, an insurance company, a mortgage broker or a casino — recognized under law as a NBFI or non-bank financial institution or not — need to be able to try and do five critical functions:
- Know Your Customer (or Client) is who they say they are.
- Know, to the best of your ability, that the source of the money they are storing, saving, or spending with or through your systems or services is legally acquired.
- Keep track of that money while it is in your possession, physically or virtually, and file a suspicious activity report for any transaction that raises questions, or a pattern of activity that is unusual or questionable.
- Create an audit trail for all events and transactions related to the client/customer, in order to protect yourself and your organization, and be able to recreate a chain of custody if required, at a later date.
- Know within reason that the use of the proceeds from money made through the use of your services and systems, is not going toward illegal purposes.
Our software, systems and solutions, through the products and modules we have developed, help you do all of this.
If you’re a provider of financial services, you could also sign up for free and download our free KYC guide: “KYC, BSA, BIS, TITLE 31, TITLE 26 AND MORE — ALL THOSE QUESTIONS YOU HAD, AND DIDN’T KNOW WHOM TO ASK.” It breaks the complex into easily understandable FAQs, and helps your employees understand how to protect themselves, and their organization’s assets and reputation.