CUSTOMER VERIFICATION/IDENTIFICATION

The "know your customer" (KYC) rules are found in the Financial Transactions Reporting Act and the Regulation made thereunder. There are three main situations in which a general duty to verify the identity of a customer or client arises.
 
(1)       Verification of a new client must take place before he is allowed to establish a facility or be added to an existing facility as the case may be.
 
(2)       Verification of identity of all clients (facility holders) in existence on 1st Jan. 2001 must be carried out by 31st Dec. 2001 unless the Minister exercises his discretion to extend this period which he may do up to 31st Dec. 2002.

(3)      Verification of identity must be carried out on any third party on whose behalf a transaction over $10,000 is being conducted through an account/facility of an intermediary, before the transaction is permitted.

(4) Verification of a customer, other than a client operating through his own account/ facility, must take place before such customer is allowed to conduct a cash transaction of $10,000 or more, whether on his own behalf or for someone else. If the customer is acting for someone else in such a transaction then that person's identity must also be verified  before the transaction is permitted to take place.

A facility holder is a person with whom there is a client type relationship and for whom a professional service is being rendered (a facility), consistent with the business activities set out in the definition of financial institution under section 3 of Financial Transactions Reporting Act. 
 
There are several exemptions to these general rules. These exemptions either relieve a financial institution of the obligation to verify identity in certain circumstances or permit a financial institution to rely on a verification which has been carried out by another financial institution concerned with the transaction.
 
The evidence to be obtained where a duty to verify identity exists is found in the Financial Transactions Reporting Regulations.
 
RECORDKEEPING RULES
 
The records which a financial institution must keep include transaction records, verification records and wire transfer records. A brief summary of the requirements for these appears below. There are other recordkeeping requirements which are explained more fully in the FIU guidelines.
 
Transactions Records

Records of every transaction that would enable the FIU to reconstruct the transaction must be kept for a minimum period of five (5) years. Such record should include: the nature and amount of the transaction; the currency in which it was denominated; the date on which the transaction was conducted; the parties to the transaction; where applicable, the facility through which the transaction was conducted, and any other facilities  (whether or not provided by the financial institution) directly involved in the transaction.
 
Verification Records
These must be maintained for a period of at least five (5) years after the customer ceases to be a facility holder and in any other case where the customer is not a facility holder, a minimum of five (5) years from the date of the verification.
 
Wire Transfers
A record of every wire transfer is to be maintained and must include information on the original source, the fields of ordering and final destination of funds together with names and addresses.