Know Your Customers

History KYC:
Since 2008 regulations have international changed constantly complicating the onboarding process. In 2018 the average time the onboarding process takes is about 24 days with the duration still increasing from year to year. Some of the major financial institutions spend around $500 million at KYC and customer due diligence. The average cost on KYC and Onboarding is around $48 million. 2013 JPMorgen added 5000 employees to their compliance team. National regulations may be a lot stricter than international standards.

The KYC process allows the banks to identify their customer and have all the information related to the customer and their potential behavior.

This gives the possibility to make a better risk assessment by identifying areas of risk that would be missed through traditional risk assessments. KYC allows the bank to have a better understanding on customer behavior. Allows the bank the opportunity to see how the customer works before committing to any type of business relation.


Objectives of KYC analysis is:
2 Customer Profile
3 Identify all relevant relations:
4 Identify the Directorship Structure
5 Identify the Shareholding Structure and UBOs
6 Verify documents and identities
7 SoF and SoW
8 Screenings and background checks

Different types of Due Diligence are:

-SDD (Simplified Due Diligence) – performed only in particular cases when the customer has an initial low risk and is regulated or stock market listed.
-CDD (Customer Due Diligence) – performed most of the times is the standard analyses.
-EDD (Enhanced Due Diligence) – performed when the client is High Risk or when other factors dictate it.


KYC procedures can be mapped in different types:

Standard structure
Complex 1: Loop Structure
Complex 2: Decentralized Ownership
Complex 3: Control UBO
Complex structure 4: Discretionary Trust
Complex 5: Orphan SPV
Complex 6: Family UBO