Your Business Bank Account – Why Enhanced Due Diligence?

Balancing the Scale: Customer Experience vs. Legislative and Regulatory Adherence As the world continues to benefit from the phenomenon of globalization, there is an ever present need to vigorously combat the efforts of various perpetrators of crime, terrorists and fraudsters, who attempt to take advantage of this ‘one world’ reality. As such, international organizations such […]

By Debbie Browne

July 2, 2015

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Balancing the Scale: Customer Experience vs. Legislative and Regulatory Adherence

As the world continues to benefit from the phenomenon of globalization, there is an ever present need to vigorously combat the efforts of various perpetrators of crime, terrorists and fraudsters, who attempt to take advantage of this ‘one world’ reality. As such, international organizations such as the Financial Action Task Force (FATF) geared towards the fight against money laundering and terrorist financing have been established.   These organizations have imposed global standards and regulations applicable to each and every existing jurisdiction with the goal of mitigating the aforementioned threats and the adverse impact they could have on their respective financial systems.

Customers, regulators, correspondent bankers, and other market players, hold banks to higher standards of accountability, regulation, scrutiny and examination than they would most other players within the financial services arena. Compliance professionals recognize that one of the major areas of conflict between a bank and an onboarding customer is balancing the customer service experience and expectation with adherence to the numerous regulatory and legal requirements being imposed. The customer’s expectation, as it stands amongst the corporate populace, is fast paced and exacting. Time is money and delays due to necessary bureaucracy can severely hinder the conduct of business. Banks are often challenged to deliver prompt service while ensuring that all necessary safeguards are addressed prior to commencing a relationship with a corporate customer (‘corporates’).

What is Enhanced Due Diligence?

The definition of Enhanced Due Diligence stems from the understanding of its predecessor – Due Diligence.   Due Diligence is the process through which a financial institution (or any other entity) gets to know its customer. For example, Due Diligence as it pertains to corporate customers would entail, but not be limited to, the following:

  • The submission of incorporation documentation;
  • The sharing of any anticipated transaction activities;
  • The identification of the nature of business;
  • The disclosure of the names of any controlling parties; and
  • The source from which that corporate would receive the funds to be introduced into the financial system.

Simply put, Enhanced Due Diligence focuses on the granularity of a customer profile to ensure that all material information is on hand before a decision is made to enter into a relationship with a customer, that is, open an account.

Enhanced Due Diligence and the Corporate Customer

The determining factor for a Bank as to whether a particular corporate is subject to Due Diligence or Enhanced Due Diligence requirements is guided by the parameters set out in the Central Bank of Barbados’ Anti-Money Laundering and Combating Terrorist Financing (AML CTF) Guideline[1] and its internal AML CTF Policies and Procedures.

The Central Bank of Barbados, in its AML CTF Guideline, outlines various types of entities and customers that should be subject to Enhanced Due Diligence. These include:

  • Trust Clients;
  • Politically Exposed Persons (local and foreign);
  • Non Face-to-Face Customers;
  • Professional Service Providers; and
  • Non-Profit Organizations.

Banks might also adopt Enhanced Due Diligence requirements for businesses that are “cash intensive” or are set up in jurisdictions that have been identified as “high risk” by FATF and other local and international AML CTF authorities.

The Business Bank Account

Whichever diligence methodology is exercised, a level of transparency must be maintained between the corporate customer and a bank. Failure to do same could ultimately result in a derogation of Barbados’ jurisdictional reputation as a competitive financial services center and therefore, the banking and business sectors have a responsibility to carry out their business in adherence with the said Guideline and the law.

Our commitment is to deliver quality service by advising of all documents and ready explanations as to the reasons for same. To the business community, your role involves, ready disclosure and submission of all documentation required and co-operation upon further enquiry. If we all play our part, the scale between the corporate customer expectation and legislative and regulatory adherence should result in an improved onboarding experience.

[1]Anti-Money Laundering and Combating Terrorist Financing Guideline” published by the Central Bank of Barbados; October 2013.

Debbie Browne

Debbie A-M. Browne is a Legal & Compliance Manager, Trust and Estate Practitioner and an Assistant Corporate Secretary at First Citizens Bank.

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