Unlocking the Secrets of KYC: A Comprehensive Guide to Understanding Customer Due Diligence, Risk Assessment, and Compliance Measures

KYC (Know Your Customer): Making sure we know who our customers are by checking and confirming their identity. We also assess if their financial activities make sense.

AML (Anti-Money Laundering): Rules and processes to stop people from making money illegally.

CDD (Customer Due Diligence): Checking who our customers are and understanding if they might be trying to do something illegal.

PEP (Politically Exposed Person): People who hold or held important public positions, along with their family and close friends.

SDD (Simplified Due Diligence): An easier check for customers who are less likely to be involved in illegal activities.

EDD (Enhanced Due Diligence): A more detailed check for customers who may have higher risks due to factors like big transactions or connections to risky areas.

Sanctions Screening: Checking if individuals or businesses are on government lists of banned or restricted parties.

Risk Assessment: Figuring out how much risk is involved with a customer, transaction, or business relationship.

Beneficial Owner: The person who really owns or controls a company or account.

Transaction Monitoring: Keeping an eye on transactions to spot anything strange or suspicious.

Source of Funds: Where the money in a transaction or account comes from.

Source of Wealth: How someone legally earned their money or assets.

High-Risk Customers: Customers who might be more likely to do something illegal based on certain traits.

KYB (Know Your Business): Checking and confirming the identity and legitimacy of business entities.

CIP (Customer Identification Program): Steps banks take to make sure they know who’s opening an account.

Customer Risk Profiling: Sorting customers based on how much risk they might bring.

Transaction Thresholds: Set limits for transactions that make us look more closely.

Ultimate Beneficial Ownership (UBO): The person who actually benefits or controls a company.

PEP Screening: Checking to find Politically Exposed Persons for extra careful checks.

Geographic Risk: How much risk is connected to the place where customers, transactions, or businesses are, especially in areas that might be risky.

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