Collection records information
KYC means know your customer. Collection records information from the customer or another source. Verification tests relevant information against suitable evidence.
A name or ownership chart on a form is collected information. The form alone does not show that the business verified it.
Section 28 requires KYC collection appropriate to customer risk. It requires verification of the appropriate information with reliable and independent data.
Sources: Federal Register of Legislation: Section 28(3)(c) to (d); Federal Register of Legislation: Section 5-2(2).
- Identify the matter
State the fact that needs to be established.
- Collect information
Record what the customer or other source supplies.
- Verify as appropriate
Use reliable and independent data appropriate to the risk.
- Resolve differences
Assess conflicting or missing information.
- Record the conclusion
Explain what was established and what remains uncertain.
From a statement to a checked conclusion
Collection and verification are different actions. The required evidence depends on the applicable duties and risk.
Follow the process from top to bottom.
Match the evidence to the fact
A source can establish one fact without establishing another. A company register can support existence without proving the authority behind a particular instruction.
Rules 5-2 requires policies to state when staff collect information and when they also verify it. The circumstances include source of funds and wealth.
Record the fact, source and conclusion. Apply the relevant customer-type requirements. Not every fact requires the same evidence or method.
Sources: Federal Register of Legislation: Section 28(3)(c) to (d); Federal Register of Legislation: Section 5-2(2).
Invented example: a company chart
A customer supplies a chart with two individual owners. A staff member compares it with suitable records and finds an intermediate company.
The staff member examines that link before recording a conclusion. The chart and the verified conclusion are different records.
This example does not prescribe a sequence for every company. A copy of the same chart in another system is not independent evidence.
Sources: Federal Register of Legislation: Section 28(3)(c) to (d); Federal Register of Legislation: Section 5-2(2).
Record gaps and exceptions
A practical file can distinguish collected information, verified information, unresolved matters and matters that do not apply. Each label needs a clear meaning.
If a normal method fails, examine whether another method or a specific legal provision applies. Record the reason and any limits.
Do not record a successful result without supporting evidence. More documents alone do not resolve an unexplained difference.
Sources: Federal Register of Legislation: Section 28(3)(c) to (d); Federal Register of Legislation: Section 5-2(2).