Anti-Money Laundering and Countering the Financing of Terrorism ("AML/CFT")
The Isle of Man has applied the "Know Your Customer" ("KYC") principle since 1985. KYC is a term used to describe the process of obtaining, retaining and using information about a customer to verify that they are who they say they are.
Increasingly, the term Customer Due Dilligence “CDD”, drawn from the Basel Committee on Banking Supervision paper of October 2001 “Customer Due Diligence for Banks” is also used. CDD encompasses KYC but it goes further than knowing who your customer is. It involves obtaining, documenting and using a broad range of information relating to a customer relationship or an occasional transaction. Areas to be considered include identity, address, source of funds and expected business or transactional activity. Certain elements of this information must also be verified. The term CDD also incorporates the ongoing monitoring of a business relationship, including the due diligence information obtained, to ensure it remains up to date and that the relationship is operating as expected for that customer. CDD is required for all new or continuing business relationships or occasional transactions.
In recent times the term CDD has tended to be used in place of KYC as this concept covers wider aspects of the customer relationship than KYC does. Under the Anti-Money Laundering and Countering the Financing of Terrorism Code 2015 (“the Code”) every relevant business must conduct CDD on a risk based approach (including Enhanced Due Diligence “EDD” in high risk scenarios), have a Money Laundering Reporting Officer, maintain appropriate procedures and controls to deal with Politically Exposed Persons, conduct ongoing maintaining of business relationships, keep adequate records and have effective staff training in this area
The definition of businesses caught by the Code (“Relevant Persons”) goes much wider than only financial services and also includes; issuers of Virtual Currencies, Estate Agents, Bookmakers, Casinos and Local Authorities amongst others. For full details of which businesses are covered by the Code please see Schedule 4 to the Proceeds of Crime Act 2008.