By Andrew Tarpey, Head of Group Compliance
In the world of financial compliance, collecting customer due diligence and adhering to KYC (Know Your Customer) requirements is an important and increasingly complex field. Customer due diligence is the process used by financial institutions (a term which includes trustee companies such as Southpac) to collect and evaluate relevant documentation about a customer in order to verify their identity. The purpose of this is to uncover any potential risk that may be associated with a client or potential client. As a regulated entity in each jurisdiction in which we operate, Southpac is required to comply with industry regulations regarding KYC, thereby ensuring we help to safeguard our customers and communities. Gathering information about our clients and verifying their identity helps to reduce the risk that our products and services will be used to assist those who seek to commit financial crimes. The ultimate goal is to ensure the financial industry isn’t being accessed by those who would seek to use it for illegal purposes such as fraud, money laundering or tax evasion.
Southpac operates in multiple jurisdictions, and as a regulated entity in each of those jurisdictions the regulations that we are required to abide by can vary somewhat. For example, the KYC requirements established by our regulator in the Cook Islands can have some differences to those of the Nevis regulator. However, the general purposes behind KYC regulations are similar and involve the following:
- Establish and verify the identity of the customer;
- Understand the nature of the customer’s activities and ensure the source of funds is legitimate;
- Assess the money laundering risks associated with a customer.
To ensure we fulfil our obligations regarding KYC, Southpac may ask clients or potential clients to provide the following:
- Proof of identification: Regulations require that Southpac maintain on file for each customer a copy of government-issued photo identification such as a passport or driver’s license. As Southpac often doesn’t meet its customers face to face, the copy of photo identification will need to be certified as a true copy of the original by a notary or other person subject to professional rules of conduct such as an attorney or certified public accountant.
- Proof of address: Southpac is required to obtain evidence of a customer’s residential address. This can be done by providing a document such as a utility bill or bank statement which shows the customer’s name and address. The proof of address document should either be an original document (this can include an electronically generated utility bill) or be certified as a true copy of the original.
- KYC form: To analyze any potential risks that a customer may present, Southpac asks relevant parties to complete a KYC form. This form provides Southpac some background on the client, such as information on their source of wealth, the business activities the customer is engaged in, and their occupation and place of employment.
- Tax declaration form: Depending on their role within a structure, some clients may be asked to complete a tax declaration form stating their country of tax residence and their tax identification number. Southpac has a requirement to obtain this information from certain individuals who are associated with trusts.
Southpac understands that providing due diligence documents can be inconvenient and raise concerns about the confidentiality and security of customer information. Maintaining customer privacy and confidentiality is of the utmost importance to Southpac. We will never disclose client information to unauthorized third parties and all client documentation will be handled with care and stored securely. We also monitor our due diligence requirements on an ongoing basis to ensure they are no more onerous than they need to be.
We greatly appreciate our clients’ understanding and assistance in helping Southpac to meet our KYC obligations. We understand that your trust is essential to our business, and if you have any questions related to due diligence requirements, please reach out to your Southpac representative.