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Do You Know Your Customer – KYC?

Under Anti – Money Laundering Law (AML) in the United Arab Emirates this regulation requires banks, money exchange houses, finance companies, and any other professional advisory firms operating in the UAE to follow strict Know Your Customer (KYC) guidelines.

What is KYC?

KYC is the term used in the banking or financial organisations, corporate service providers, law firms and real estate companies etc. KYC is a process that has to be complied by financial institutions or those, whereby these set of institutions obtain information about the identity and address of the customers.

Why is KYC needed?

KYC is important because it helps the organisations to ensure that the individual or the company they are dealing with and other details are valid. By ensuring the identity of individuals and corporations, it helps to prevent any fraud activities.

The KYC practice has been in mode for many years. It is a must and all individuals have to comply. It is not possible to open a back account or account for mutual funds without KYC compliance.

Why must KYC be carried out?

  • To conform with the appropriate laws and regulatory guidelines.
  • Prior to taking a prospective client on, it is vital for the business to know and be able to confirm who their client really is
  • To permit the business to fully comprehend and know the dealings of their client in order to carry out their instructions is efficiently
  • To prevent elements from using the firm for money laundering activities and to report any suspicious or illegal activities in accordance with applicable laws and regulations.

How to apply the KYC process?

There are two approaches applied to attain more information on the client or company and means to validate the information provided is true, correct and accurate.

1. Client Identification Information 

For example, if a business is contacted by a potential client on a new subject, certain information of the client must be submitted to the business in order to identify who the client is:

An individual’s complete identity and address is usually obtained from the following documents:

  • Passport
  • Emirates Identity Card (should the individual be living in the UAE)
  • Up-to-date utility bill (proof of residence)

Note the utility bill must contain complete physical address and telephone number etc.

2. Company Identification Information

Complete identity of the business, activity, address, Director(s) and Shareholder(s) is usually obtained from the following documents:

Company Incorporation Documents to include:

  • Company and/or trade name/registered or business address/date and place of incorporation or registration/corporate structure and ultimate beneficial owner details
  • Copy of passports of individuals with executive authority to include:
  • names of all directors, partners, shareholders of company or business/persons with executive authority, information on company structure and respective shareholdings.

Note that certain exemptions apply to public listed companies and additional information is usually required for Politically Exposed Persons.

Next Step – Verification

On delivery and proof of the above information, an organisation is required to (unless an exemption applies) to take the next steps to verify the identity of the client and the individuals authorised to instruct on behalf of a corporate client or company through reliable and independent sources.

Depending on the type of instructions, additional information on the identity of the client, the source of funds etc. may also be requested by the business. Even when you already submit the KYC documents once, orgnaisation such as the banks can ask again as they are required to periodically update KYC records. This is a part of their ongoing due diligence. The periodicity of such updating would vary from account to account or categories of accounts depending on the organisations perception of risk.

Being one of the top Corporate Service Providers in the UAE, Synergy Group have qualified and strategic partners who can assist you on any information regarding due diligence and compliance.

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