Do You Know Your Customers?
Customer acceptance is crucial for the fight against white-collar crime. It is the first hurdle to overcome enabling criminals to misuse the services of financial institutions for criminal intents. In order to fight money laundering, the financing of terrorism, and other criminal acts, international minimum standards have been enacted for the identification of new customers. The Know Your Customer principle obliges banks and insurance companies to identify applicants, before they can be accepted as customers. Motivation and plausibility of the business relation have to be checked and an initial risk classification for each new customer has to be issued.
Customers with limited financial resources or with a social or professional profile that is not compatible with high transactions or the planned conclusion of an insurance contract must be taken as an alarm signal by banks and insurance companies. The information provided on customer acceptance or on conclusion of the contract regarding the financial situation and intended behavior is to be matched continually with the actual customer behavior. Achieving a comprehensive view on the customer-related risk is a challenge for financial service providers that cannot be faced without IT support.