KYC or “Know Your Customer” is a requirement that
more and more offshore banks, financial service providers and offshore incorporation agents are imposing on their
customers. This includes shareholders, directors and all signatories to the account. Essentially the identity of
every customer must be confirmed. And the reasons why you want to open the account, the number of transactions and
the amount of funds that will move through the account during a year.
KYC consists a series of questions to be answered and
original documentsof to be sent to the service provider. The information given to the service provider is kept
confidential and is not given to any authority. Know your customer questionnaires are not only for new accounts,
they are also sent to longtime clients to update records.
By law, KYC is enforced in certain tax havens, in others countries it may be the
local bankers association that requires it from it’s members. Bank Secrecy is not compromised in any way
if your account is only used for legal purposes. Money laundering and terrorist
activity is what has made Know Your Customer to be implemented all around the world. It lets service providers
screen their customers to make sure that their services are not being used for criminal activities.
The other reason why offshore banks and other financial service providers insist
on performing these checks to prove that they have carried out due diligence or KYC, is in case, in the future, one
their clients is suspected or convicted of a crime while using their services, they will be able to show that all
precautions were taken at the beginning and throughout the relationship with the client. Meaning they will not