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KYCKYCknow your customer


   

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 fined.