We understand that some of you have questions about how financial institutions address the legal requirement for Know Your Customer (KYC) as part of AML legislation and the choices they make in this regard. It is important to understand that each financial institution has its own procedures for KYC, but they all follow the same fundamental principles in accordance with the law.
What is Know Your Customer (KYC)?
KYC requires financial institutions to collect information about their customers to understand their financial activities and identity. This helps prevent financial crime by identifying suspicious transactions.
Individual financial institutions' procedures:
Each financial institution may have different methods of collecting and assessing KYC information, but they usually include:
Identification: Collecting documentation that verifies the customer’s identity, such as ID, address, and company registration (CVR) number.
Purpose of the business relationship: Understanding the purpose of the customer relationship, e.g., why an association is opening a bank account.
Transaction monitoring: Monitoring transactions to identify suspicious activities and ensure they are legitimate.
Annual updates: Periodic updates of the customer’s information to ensure its accuracy.
How does this affect our associations?
For our associations, this means that we need to provide financial institutions with the necessary information about our association and board directors when opening bank accounts or conducting larger financial transactions. This helps fulfill our responsibilities under AML legislation.
We encourage you to cooperate with the financial institutions and provide them with the necessary information to make the process as smooth as possible.
If you have specific questions about the procedures your financial institution follows, feel free to contact them directly for further information and guidance.
We appreciate your understanding and cooperation in this important effort to prevent financial crime.