KYC

What is Know Your Customer (KYC)?

Know Your Customer (KYC) is the process businesses put in place to verify the identity of your customers, clients and suppliers. It involves evaluating the potential risks for illegal activity that the relationship with your customer poses to your business. Regulations, such as anti-money laundering or bank regulations, govern KYC processes.

There are a number of reasons to establish and abide by KYC guidelines, primarily to prevent people from using your business for money laundering or other corrupt activities. They can also help you better understand your customers and their financial practices so you can better manage and mitigate risk to your organisation.

KYC is about doing your due diligence, including researching company data, checking sanctions, politically exposed persons (PEPs) and watchlists, and investigating senior executives and directors. It’s critical for organisations to have comprehensive due-diligence procedures in place to make sure they conform to the most up-to-date national and international KYC standards.

Worldwide company identity verification

A key component of KYC due diligence is company identity verification. In today’s global economy, organisations must ensure that the individuals and companies they’re doing business with are indeed who and what they say they are – that they’re legitimate and above-board.

There are due-diligence technology solutions on the market that incorporate worldwide company identity verification. These tools are quick and thorough, so you can be confident that you know who you’re doing business with.

Checking sanctions and watchlists

Another critical element of KYC due diligence is closely monitoring national and international sanctions lists and watchlists. Illegal activities can result in individuals or organisations having sanctions levelled against them. Such activities might include:

  • money laundering
  • terrorism and terrorist financing
  • drug trafficking
  • human-rights violations
  • arms proliferation
  • violation of international treaties

Watchlists are lists of individuals, groups or organisations that require close surveillance, usually for legal or political reasons.

Typically, governments or other international authorities establish these lists. Among the international sanctions and watchlists are Her Majesty’s Treasury in the UK, the FBI and the Office of Foreign Assets Control (OFAC) in the US, and Interpol.

Sanctions and watchlist checks, therefore, are specialised searches accessing a number of international, government or regulator databases to identify individuals who are prohibited from engaging in certain activities or industries.

Checking PEP lists

Similar to sanctions lists and watchlists, there are searchable lists and databases you can check to identify politically exposed persons (PEPs). A PEP is someone with a prominent public function, as well as his or her family members and close personal or business ties. Because of their position and potential influence, PEPs can pose a greater risk for involvement in crimes such as corruption, bribery and money laundering.

Diligence®

To safeguard your business and reputation, it’s more important than ever to know your customers. Lexis Diligence® pulls together all the information you need in one place to carry out comprehensive due diligence and comply with regulatory requirements.

With Diligence®, you can:

  • monitor government sanctions lists, watchlists and PEP lists
  • screen third parties by conducting thorough company background checks that draw on more than 26,000 sources, including global, national, and regional newspapers; blogs; and an archive that dates back more than 40 years
  • access international court cases concerning bribery and corruption, so you can stay on top of litigation that could disrupt your business
  • generate due-diligence reports, so you have a verifiable audit trail to easily demonstrate your compliance efforts
  • access premium content, including millions of public and private company profiles, risk-analysis reports and biographical sources

Entity Insight®

To further assist in your KYC efforts, LexisNexis Entity Insight® gives you greater transparency into your business risk and provides the information you need to prevent or mitigate that risk. Our risk-management solution performs global adverse media monitoring and delivers relevant and empowering business intelligence on your supply chain and third-party network so you can make well-informed, smarter business moves.

Entity Insight®’s PESTLE (political, economic, sociocultural, technological, legal and environmental) scoring framework helps reinforce your company’s risk-based approach and enables you to more quickly identify risk from your supply chain and third-party network. With access vast market intelligence and thousands of premium news sources typically unavailable on the open web, Entity Insight provides you with a more complete view.

Entity Insight® allows you to:

  • analyse a snapshot of risk levels and trending risk areas, and drill down into specific risk profiles
  • manage active and pending entities
  • visualise news volume for all active entity mentions, colour-coded by PESTLE category
  • identify the top 10 news volume trends among active entities and risk topics
  • monitor adverse media mentions and mitigate emerging risks

Diligence Spotter®

LexisNexis Diligence spotter® is another critical instrument in your KYC risk-management and compliance toolbox. The software combines third-party screening, risk assessment, ongoing monitoring and case management to support your due-diligence processes.

With this robust regulatory compliance tool, you can:

  • capture a real-time, daily assessment of business risk so you can escalate your due diligence as needed in an end-to-end workflow solution
  • identify high-risk customers for escalated due diligence and maintain an audit trail of your efforts
  • proactively manage KYC risk processes to ensure your organisation properly conducts KYC checks and meets KYC standards
  • incorporate additional internet research in your screening, so you can be confident that as regulations evolve, Diligence spotter® will keep up

BatchNameCheck®

BatchNameCheck® is an automated KYC tool that provides daily screening results and reports to help you identify and escalate individuals or organisations that pose a potential risk to your business. With access to global watchlists, sanctions lists, PEP databases and negative-news searches, you receive near-real-time results that allow you to move your business forward with confidence.

With BatchNameCheck®, you can

  • automate your KYC checks
  • strengthen your due-diligence practices
  • stay alert to compliance risk

It’s time to know your customer and mitigate your risk of financial, regulatory and reputational damage. LexisNexis can help.