Tips On How To Know Your Customer

 

Performing a know your customer check is easier than you may think

Are you planning on partnering with a business based in Hong Kong? If so, you’re required to run a Hong Kong KYC (know your customer) check. The same applies to businesses with an address in Japan. You’ll need to perform a Japan KYC check.

The process is the same, regardless of where the company is located. The process is also a legal requirement.

The know your customer check helps prevent money laundering and terrorist financing. Failing to do due diligence can result in hefty fines and the possibility of not being allowed to do business in the country.

So, how do you run a Hong Kong KYC or a Japan KYC? Here’s a brief look at the simple steps.

 

Gather the Necessary Information

 

The business you’re merging or partnering with will need to provide the following information so you can verify specific aspects of the company.

·         Full Business/Owner’s name

·         The owner’s date of birth or the date the business is incorporated

·         Nationality, even if the owner is a Hong Kong or Japanese native

·         The unique identification number (UIN) of the business. Sole proprietors will provide their passport or identity card number. The type of documentation used to supply this information is also necessary for this step.

If the company is a large corporation with multiple owners, stakeholders, or ultimate beneficial owners, you’ll need the following information for the screening process.

·         Proof of identification (Valid IDs, Residence, Date of Birth, Nationality of shareholders and members of the beneficial owners).

·         A copy of the Board of Directors’ decisions.

·         A copy of the company’s Memorandum of Association.

With this information, you can verify the business’s credentials and detect red flags that may indicate the company’s participation in illegal financial activities.

 

The Purpose of Performing a KYC Check

 

The objectives of a KYC check are posted on the Ministry of Home Affairs (MHA), Ministry of Finance (MOF), and the Monetary Authority of Singapore (MAS) websites. The information is basically the same for Japanese-based companies.

·         Detect, deter, and prevent money laundering, associated predicate offenses, and terrorism financing.

·         Protect the integrity of its financial system from illegal activities and illicit fund flows.

Using a variety of approaches, an effective KYC can help prevent illegal and fraudulent activity. Some of these approaches include maintaining close policy and operational coordination and cooperation with all stakeholders. The process also enhances private sector stakeholders’ understanding of money laundering/ terrorist financing risks and promotes a culture of compliance.

Other approaches include prioritizing resources based on risk. If fraudulent or illegal activity is suspected or detected, the organization will take decisive action that includes alerting law enforcement to the money laundering/ terrorist financing activity, including that relating to foreign crimes.

These methods can also help disrupt drug dealing and other serious offenses early to help prevent profits from being laundered.

With the importance placed on performing effective KYC checks, the government is working to reduce the rate of financial crimes occurring in Hong Kong and Japan.