What is the Fund KYC Requirement?
The government of Singapore is doing what it can to regulate its financial institutions. Its measures revolve around detecting, deterring, and preventing illegal activities such as fraud, terrorism financing, and money laundering. MAS has also put that responsibility on payment service providers, trust managers, insurance brokers, financial advisers, and fund managers. Therefore, these parties need to carry out various checks such as AML, CFT, and KYC. Our focus is KYC.
What is Fund KYC?
KYC is the abbreviation for Know Your Customer. As the name suggests, it involves verifying your customer’s identity. The process can be done at the beginning of the business collaboration or before that. It is a common term in banks in the verification process of a regulated customer while assessing and monitoring their risks. In anti-money laundering, KYC is also a tremendous player.
Why is Fund KYC important?
For investors, a Fund KYC check is an ideal way of mitigating risks and building trust. It is one way of assuring your clients that they are dealing with a legitimate organization. Financial, especially investment activities, tend to thrive under such circumstances since the environment is secure and trustworthy. Therefore, that makes the efforts you put in carrying the checks worthy.
Besides earning their trust, it also prevents your company from associating with terrorists, fraudsters, and terrorists. After all, it becomes easy to detect transactions related to such people. Consequently, the company gets to deter it and, above all, prevent its occurrence. That’s a plus since an association with illegal activities could cost you the business and clients.
What do KYC of Fund Checks Entail?
The checks have some variations depending on the amount of investment, the risk appetite of the particular business, and the client demographics. Nevertheless, there are standard requirements.
- One of them is the identification documents verification. If you are a company, the identification documents are Government Licenses and certified articles of incorporation. On the other hand, an individual submits a passport or its equivalent.
- You need to check a reliable commercial database for the name of the individual company or group in the list of AML/CFT sanctions.
- Confirm that they are not Politically Exposed People or affiliated with them.
- Use all that and internal measures to determine their risk
If the deal involves a substantial amount of money, you need to do even more. It is also the same case if the risk is enormous.
- Identify the source of income of your client
- Assess their ability to invest in that particular market
- Find out their backgrounds, credit profiles,s and financial portfolios in detail
Conclusion of Fund KYC
The findings should be in the form of a report. It comes in handy during regulatory checks, audits, and records retention. Therefore, every company should adopt it since it is an effective risk management strategy. It is one sure way of avoiding associating with clients involved in illegal and shady businesses. That’s because what is at stake if that were to happen can be too much to bear. Can you imagine losing your business or having one without clients? That would be terrible, but Fund KYC can help you avoid it.