"Know Your Customer" (KYC) represents an important part of due diligence and thus becomes a fundamental principle of compliance. This requires companies to check their customers before entering into a business relationship. The aim of Know Your Customer Compliance is to effectively combat money laundering and terrorist financing, as well as other forms of crime. For this reason, various screening measures need to be implemented. These include, among others, the verification of identity, but also the screening of politically exposed persons (PEP) as well as possible sanctions. If possible risk factors are identified, further checks are required. As a consequence, this may lead to the refusal or termination of a business relationship. The legal basis in Germany is primarily the Money Laundering Act, but also relevant directives of the European Union. Know Your Customer Compliance is therefore part of companies` duty of care. But what do companies have to do to comprehensively ensure Know Your Customer Compliance?

KYC as an integral part of your CMS

In order to ensure Know Your Customer Compliance in your company, the following measures should be taken:

  • Define a robust Know Your Customer process and establish it as an integral part of your compliance management system (CMS).
  • As part of governance, create binding policies that require the implementation of the know-your-customer process and a corresponding audit.
  • Review compliance with these requirements on a regular basis and take effective corrective action as needed to ensure Know Your Customer compliance.
  • Raise awareness and train your employees and managers on the importance of Know Your Customer Compliance. Demonstrate how it can be implemented in day-to-day business operations.

Training as the key to Know Your Customer Compliance

Anyone who fails complying with legal requirements and thus violates the corporate duty of care to ensure Know Your Customer Compliance risks heavy fines or even imprisonment. In addition, there is a risk of considerable damage to the company's reputation. This is why effective training on Know Your Customer Compliance and professional awareness measures are of particular importance. Demonstrate how the Know Your Customer process works and raise awareness of legal and regulatory requirements. Train your staff in the use of appropriate tools to ensure Know Your Customer Compliance in everyday practice. We at Security-Island support you in this process. Because our e-learning on Know Your Customer Compliance creates clarity. The combination of multimedia training formats makes our solutions an asset to your compliance management system.