Account opening, investor onboarding and KYC/AML requirements
Onboarding questions test practical CDD: who must be identified, what evidence is acceptable, when enhanced measures apply, and how tax classification sits alongside AML.
CDD building blocks
- Identify the investor and, for entities, the beneficial owners - commonly 25% ownership or control, with risk-based look-through for control by other means and lower thresholds in higher-risk cases.
- Verify identity from reliable, independent sources: certified passport or driving licence, certificate of incorporation, register of members, trust deed.
- Understand the purpose and intended nature of the relationship and the expected transaction profile.
- Screen against sanctions and PEP lists, and consider adverse media.
- Apply ongoing monitoring: trigger-event reviews, periodic refresh, and transaction monitoring.
Entity types
Companies require constitutional documents, a board resolution and authorised signatory lists. Trusts require the trust deed plus identification of settlor, trustee, protector and beneficiaries. Nominee and omnibus arrangements require the nominee to hold underlying CDD and to be able to pass it on promptly. Source of funds (where this money came from) is distinct from source of wealth (how the overall fortune was built).
EDD and tax
PEPs, FATF grey/black listed jurisdictions, complex structures and unusual transactions trigger EDD: senior management approval, enhanced source of wealth evidence and more frequent review. Separately, FATCA and CRS require self-certification of tax residence, TIN and entity classification (for example a passive NFE with controlling persons), plus W-8/W-9 for US withholding.
Worked example
A BVI company with two corporate shareholders, each owned through a nominee, subscribes. The TA traces ownership through both layers, identifies a 30% ultimate beneficial owner who is a PEP, and applies EDD: senior sign-off, source of wealth evidence and enhanced monitoring. The self-certification shows a passive NFE with a reportable controlling person.
Traps
- Applying a rigid 25% test without considering control by other means.
- Accepting uncertified copies, expired documents, or documents that do not match the applicant's name.
- Treating source of funds and source of wealth as interchangeable.
- Thinking a sanctions hit is cured by completing CDD - both checks are required and a hit must be escalated or blocked.