The matters of Due Diligence and KYC ("Know Your Client") are relevant to any entrepreneur but have particular importance in the areas of finance, law and consulting.
Due Diligence is a compilation of measures aimed at mitigating the risk in cooperation with the counterparty. In case of financial, corporate and legal services, these matters refer to the cooperation with the client. They are an integral part of work for service providers operating in the above business areas.
KYC ("Know Your Client") is a compilation of measures taken by professional market participants, including the trust and corporate service providers, in order to identify the actual client who uses their services.
The above regulations are currently effective in all developed and progressive jurisdictions around the world.
The strict compliance with the above mentioned standards is essentially also in the interest of the client, as it enables him to be confident of his relationship with the relevant consulting, law, financial or banking organisation.
The list of preconditions for compliance with Due Diligence guidelines, depending on specific regulations of the particular jurisdiction where the client proposes to operate, may vary slightly. Generally the requirements for the documentation and information to be provided in order to comply with the above standards are similar in almost every country.
The basic documents for compliance with Due Diligence and KYC provisions in most jurisdictions are:
- ID Document. This is a document that identifies a specific individual, and is internationally recognised, such as a passport. Other ID documents such as domestic ID cards or domestic passports may be provided as complementary ID
- Proоf of address. This is a document which confirms the individual’s actual residential address. Examples of this may include:
- Utility bill. This is a document issued by service providers for the supply of utility services at the individual’s residential address, such as a bill for electricity or gas
- Bank account statement confirming the individual account holder’s address
- Another confirmation of the individual’s residential address such as a certificate of declared address or an extract from the house residents register
In addition to the above essential due diligence documents the regulations of a particular jurisdiction or organisation may require additional documents such as:
- Reference letter from a bank or another organisation that is a participant in the market of regulated professional services
- Curriculum Vitae of the Beneficial Owner
- Complementary or further ID documentation
- Complementary or further proof of address
- Other documents depending on the rules existing in a specific jurisdiction and applicable to the particular company type