Know Your Customer (KYC) compliance regulation has proved to be one of the biggest operational challenges banks, accountants, lawyers and similar financial service providers worldwide have had to overcome.
World-Check, the industry standard KYC compliance solution, provides an overview of KYC compliance and its origins, and outlines the compliance mandate as applicable to banks, accounting firms, lawyers and other regulated financial service providers – not just in the UK, Europe and the USA, but all around the world. Relied upon by more than 3,000 institutions worldwide, this KYC database solution provides effective legal and reputational risk reduction.
Why “Know Your Customer?”
The 9/11 terrorist attacks on the World Trade Centre revealed that there were sinister forces at work around the world, and that terrorists activities were being funded with laundered money, the proceeds of illicit activities such as narcotics and human trafficking, fraud and organised crime. Overnight, the combating of terrorist financing became a priority on the international agenda.
For the financial services provider of the 21st century, “knowing your customers” was no longer a suggested course of action. Based on the requirements of legislative landmarks such as the USA PATRIOT Act 2002, modern Know Your Customer (KYC) compliance mandates were created to simultaneously combat money laundering and the funding of terrorist activities.
What is Know Your Customer (KYC)?
Know Your Customer, or KYC, refers to the regulatory compliance mandate imposed on financial service providers to implement a Customer Identification Programme and perform due diligence checks before doing business with a person or entity.
KYC fulfils a risk mitigation function, and one its key requirements is checking that a prospective customer is not listed on any government lists for wanted money launders, known fraudsters or terrorists.
If preliminary KYC checks reveal that the person is a Politically Exposed Person (PEP), for example, Advanced Due Diligence must be done in order to ensure that the person’s source of wealth is transparent, and that he or she does not pose a reputational or financial risk in terms of their finances, public positions or associations. Beyond customer identification checks, the ongoing monitoring of transfers and financial transactions against a range of risk variables forms an integral part of the KYC compliance mandate.
But to understand the importance of KYC compliance for financial service providers better, its origins need to be examined.
Origins of Know Your Customer (KYC) compliance
The arrival of the new millennium was marred by a spate of terrorist attacks and corporate scandals that unmasked the darker features of globalisation. These events highlighted the role of money laundering in cross-border crime and terrorism, and underlined the need to clamp down on the exploitation of financial systems worldwide.
Know Your Customer (KYC) legislation was principally not absent prior to 9/11. Regulated financial service providers for a long time have been required to conduct due diligence and customer identification checks in order to mitigate their own operation risks, and to ensure a consistent and acceptable level of service.
In essence, the USA PATRIOT Act was not so much a radical departure from prior legislation as it was a firmer and more extensive articulation of existing laws. The Act would lead to the more rigorous regulation of a greater range of financial services providers, and expanded the authority of American law enforcement agencies in the fighting of terrorism, both in the USA and abroad.
In October 2001, President George W. Bush signed off the USA PATRIOT Act, effectively providing federal regulators with a new range of tools and powers for fighting terror financing and money laundering. During July 2002, the US Treasury proceeded to introduce Section 326 of the PATRIOT Act, a clause that removed some key burdens for regulators and added significant enforcement muscle to the Act.
What 9/11 changed, in essence, was the extent to which existing legislation was being implemented. Using the provisions of the earlier anti-terrorism USA Act as a foundation, it included the Financial Anti-Terrorism Act, which allowed for federal jurisdiction over foreign money launders and money laundered through foreign banks. Significantly, it is this anti-terror law that would make the creation of an Anti Money Laundering (AML) programme compulsory for all financial institutions and service providers.
Section 326 of the USA PATRIOT Act dealt specifically with the identification of new customers (“CIP regulation”), and made extensive provisions in terms of KYC and the methods employed to verify client identities.
In accordance with this piece of updated KYC legislation, federal regulators would hold financial institutions accountable for the effectiveness of their initial customer identification and ongoing KYC screening. Institutions are required to keep detailed records of the steps that were taken to verify prospective clients’ identities.
Although current KYC legislation does not yet demand the exclusion of specific types of foreign-issued identification, it recommends the usage of machine-verifiable identity documents. The ability to notify financial institutions if concerns regarding specific types of identification were to arise, combined with a risk-based approach to KYC, proved to provide a robust mechanism for addressing security concerns.
Effectively, the risk-based approach to customer due diligence grants regulated institutions a certain degree of flexibility to determine the forms of identification they will accept, and under which conditions.
KYC compliance: Implications for banks, lawyers and accounting firms
The KYC compliance mandate, for all its positive outcomes, has burdened companies and organisations with a substantial administrative obligation. Additionally, KYC compliance increasingly entails the creation of auditable proof of due diligence activities, in addition to the need for customer identification.
Huntron Scanners
Add Scanning Capabilites to Your Huntron Tracker Model 30 System
Adding a Huntron® Scanner to your Tracker Model 30 system lets you access components using standard DIP clips and cables, custom cables to PCB connectors or interface to a bed-of-nails.
You can compare one component with another in real-time (64 pins max.) or use your PC to automate testing and scan up to 128 pins.
Huntron Scanners can be used with a Huntron Access Prober to provide Common line connections while the Prober is probing a PCB. This method gives you up to 128 selectable Commons to use. For example, you can connect the Scanner to a connector on a PCB mounted in the Prober using a common ribbon style cable. While the Prober is probing, any one of the lines on the connected ribbon cable can be selected as the Common reference. This would provide you true point-to-point testing capabilities.
Note: The ProTrack Scanner will be replaced by the Scanner II and/or the Scanner 31S effective 1/1/2008. This applies to commercial sales only.
Scanner II and Scaner 31S users may want to consider these Optional Accessories to enhance their test capabilities.
Highlights:
· The Scanner II and Scanner 31S accessories add scanning capability to the Tracker Model 30
· All Scanners have a minimum 64 pin capability
· The Scanner II can scan up to 128 pins when the A and B channels are combined
· The Scanner 31S use standard IDC style connectors
· The Scanner II uses the common SCSI-2 (68 pin) style connectors
· Up to 8 Scanner IIs can be “daisy-chained” to increase the available number of test pins
Selecting Accessories for your Scanner II
The Scanner II accessories for interfacing to your printed circuit board come "ala carte". This means that you select the accessories you want included with your Scanner. Choose from SMT or through-hole style DIP clip and cable kits (Scanner Adapter required with Scanner II) or a mutli-pin breakout cable. Details on these accessories are provided on this page
Adding a Huntron® Scanner to your Tracker Model 30 system lets you access components using standard DIP clips and cables, custom cables to PCB connectors or interface to a bed-of-nails.
You can compare one component with another in real-time (64 pins max.) or use your PC to automate testing and scan up to 128 pins.
Huntron Scanners can be used with a Huntron Access Prober to provide Common line connections while the Prober is probing a PCB. This method gives you up to 128 selectable Commons to use. For example, you can connect the Scanner to a connector on a PCB mounted in the Prober using a common ribbon style cable. While the Prober is probing, any one of the lines on the connected ribbon cable can be selected as the Common reference. This would provide you true point-to-point testing capabilities.
Note: The ProTrack Scanner will be replaced by the Scanner II and/or the Scanner 31S effective 1/1/2008. This applies to commercial sales only.
Scanner II and Scaner 31S users may want to consider these Optional Accessories to enhance their test capabilities.
Highlights:
· The Scanner II and Scanner 31S accessories add scanning capability to the Tracker Model 30
· All Scanners have a minimum 64 pin capability
· The Scanner II can scan up to 128 pins when the A and B channels are combined
· The Scanner 31S use standard IDC style connectors
· The Scanner II uses the common SCSI-2 (68 pin) style connectors
· Up to 8 Scanner IIs can be “daisy-chained” to increase the available number of test pins
Selecting Accessories for your Scanner II
The Scanner II accessories for interfacing to your printed circuit board come "ala carte". This means that you select the accessories you want included with your Scanner. Choose from SMT or through-hole style DIP clip and cable kits (Scanner Adapter required with Scanner II) or a mutli-pin breakout cable. Details on these accessories are provided on this page
CDM Electronics
CDM Electronics is a certified small business, CCR# 42827, founded in 1993, CDM Electronics' mission is to provide our customers with exceptional interconnect products and value added services that meet or exceed our customers' expectations. We welcome the chance to design a creative solution to the most challenging issues.
Our Products
CDM Electronics is a NEDA Authorized Supplier for electronic connectors, coaxial cables and other interconnect products. This assures you that you are receiving factory new and approved products. With today's ever changing business climate, particularly in light of RoHS initiatives which transpired in July 2006, it is imperative that your applications perform to specification and in compliance with environmental and other government regulations. For those applications not requiring RoHS compliance, there are still several performance and reliability factors that are compromised when superior products are not deployed. Choose CDM for all of your interconnect sourcing requirements and you are guaranteed excellent products with on time deliveries.
Our Services
In 1999, CDM management recognized that customers wanted access to thousands of parts in stock ready for same day shipment. But this only represented half of our customers' needs. So
we embarked upon a program to expand our offering into the arena of cable assembly and value added programs. Since that time, CDM has experienced explosive growth and now provides a host of value added services, from "womb to tomb". We provide quick turn engineering and cable assembly services for prime contractors, as well as 2nd and 3rd tier providers. Our satisfied customer list includes Northrop Grumman, BAE, General Dynamics, and all branches of the United States military: Army, Navy, Air Force and Marines.
CDM credits our great staff, especially our brilliant engineering team, with our enormous success in this area.
Proactive Cost Reduction Program™
Process improvement and cost-saving solutions are as important to us as they are to you. Our "Proactive Cost Reduction Program" is a trademarked initiative created by CDM Electronics to constantly create cost-saving solutions for our customers.
Our People
From Reception to Shipping, CDM Electronics is proud to have the most loyal & dedicated employees. But it takes more than just our own employees to make our company great. We rely heavily on the expertise of several of our providers, especially our web designers:
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