Know Your Customer or Know Your Client, also called Customer Due Diligence. The term describes a set of money laundering control and sanctions compliance policies and procedures that are used to determine the true identity of a customer/client and the type of activity that will be “normal and expected” for the customer, and to detect activity that should be considered “unusual” for the particular customer. Companies and financial institutions can leverage their Customer Due Diligence (Know Your Customer) screening technologies and practice to identify entities and individuals included on international and OFAC sanctions lists. An example is using KYC or CDD when screening for sanctioned Russian oligarchs, who have expanded their financial interests worldwide. Screening for them as individuals is not enough. Companies and financial institutions are also responsible for screening their other customers for evidence of these sanctioned oligarchs who might be Ultimate Beneficial Owners (UBOs) holding at least 50 percent (see OFAC 50% Rule) ownership in these other customers. A list screening tool cannot screen what has not been included in your CDD/KYC data collection.

« Back to Glossary Index