European financial and investment firms and subsequently the Cyprus Investment Firms (CIF) and Funds, as well as Payment Institutions are required to follow certain procedures and regulations to eliminate Money Laundering (ML) and Terrorism Financing (TF) risks. Such risks may derive from the establishment of a business relationship, without adequate assessment and evaluation of the client’s motives and appropriateness.
With this blog post,
Evdokia Pitsillidou, an instructor at the institute, demonstrates an in-depth analysis of the Client Onboarding procedure, the Risk Based Approach (RBA), along with valuable information surrounding the AML/CFT processes. Further, a comprehensive online course is offered through the IforPE platform, titled
A Complete Client Onboarding Procedure as per AML & MiFID.
Towards the end of this blog post, you will find detailed information about the valuable skills and competencies acquired upon course completion and how they contribute to ensuring the successful implementation of the AML Monitoring Plan.
What is the Client Onboarding Procedure?Before welcoming a new client into the business, there are certain steps that need to be followed in order to ensure the assessment and mitigation of ML/TF risks surrounding the client. The client onboarding process entails:
- Client Acceptance: It is an essential part of risk management and regulatory compliance, ensuring that the client aligns with the company's values, legal requirements, and risk tolerance.
- Client Identification: Assuring compliance with Know Your Customer (KYC) procedures, collecting required information and verifying the client’s identity.
- Client Economic Profile: Constructing such profile, for entities to understand the client alongside the risks arising and the purpose for requesting the establishment of a business relationship. By doing that, obliged entities can monitor them more effectively, if onboarded.
- Appropriateness Test: Obtaining information on client’s knowledge and experience relating to a specific type of investment service or product such as CFD.
- Remote Onboarding Solution: In cases where regulated entities use such solutions, it is crucial that a pre-implementation assessment and quality assurance testing is carried out to determine adequacy.
Implementing a robust client onboarding procedure provides supervised entities the ability to mitigate derived client risks, ensure compliance, and build long-term, sustainable relationships with clients.
Risk Based Approach
Regulated entities must initially identify and document the risks to be managed, mitigated and then create a complete monitoring program. This program monitors how such risks are being assessed, record-kept, and monitored, so there is an effective operation in complying with the applicable regulations.
In this respect, evaluating how the business introduction occurred is extremely crucial as non face-to-face introductions entail higher risks and, in some cases, certain entities will not allow client onboarding to transpire if it is on a non face-to-face basis. Ultimately, the RBA recognises that ML/TF risks vary depending on the primary risk factors of the customer, including geographical area, products, and delivery channels.
What is the A Complete Client Onboarding Procedure as per AML & MiFID course and what does in include? The
A Complete Client Onboarding Procedure as per AML & MiFID course is designed by SALVUS Funds and delivered by their Risk & Compliance Director,
Evdokia Pitsillidou. This program is developed for professionals entrusted with AML duties and responsibilities, as well as professionals working at Cyprus Investment Firms, Crypto-Asset Service Providers (CASP), Electronic Money Institutions (EMI), and other regulated entities dealing with ML/TF threats.
Professionals undertaking this course will acquire the skills and competencies necessary for enhancing their firm's AML/CFT requirements and regulatory compliance. After this course, they can ultimately ensure comprehension of key information regarding the client onboarding procedure according to AML and MiFID regulations.
The syllabus of the client onboarding course includes:
- Money Laundering (ML), Stages and Methods of ML
- What is Money Laundering (ML)?- The phases/stages of Money Laundering (ML), and examples
- The methods of Money Laundering (ML)
- Differences between Money Laundering (ML) and Terrorist Financing (TF)
- Similarities between Money Laundering (ML) and Terrorist Financing (TF) - The AML Regulatory Framework
- Supervisory Authorities - Powers of the supervisory authority
- AML Regulatory Framework - Assessing and Managing Risks – Risk Based Approach (RBA)
- Risk-Based Approach (RBA)
- Primary risk factors and associated risks
- Keeping risk assessments up to date
- Business-wide risk assessments
- Individual risk assessments
- Business-wide & Individual risk assessments
- Assessing and Managing ML&TF risks by Sector - Know Your Customer (KYC) and Customer Due Diligence (CDD)
- Customer Identification and Due Diligence -procedures - Simplified Customer Due Diligence (SDD)
- Enhanced Customer Due Diligence (EDD)
- Financial inclusion and De-risking
- Documentation Reliance on third parties
- Client Appropriateness and Target Market
- Client Suitability and Appropriateness - Manufacturer & Target Market - Identification
- Distributor & Target Market Identification
- Negative Target Market Identification - Client Onboarding Process
- Client Acceptance Policy
- Customer Identification
- Customer Economic Profile
- Appropriateness Test – Good Practices
- Use of Remote Onboarding Solutions - Risk Factors to be considered
- Information to be collected
- Customer risk factors
- Countries and geographical risk factors
- Products, services and transactions
- Delivery channels
- Weighting risk factors
- Practical Examples - MOKAS Report ’20-’22 - Ongoing Monitoring and Record Keeping
- Ongoing Monitoring
- Record Keeping
- CySEC Onsite Inspections - Circular C550 - Thematic review on supervised entities' compliance with the AML/CFT Law
- Common deficiencies
- Good practices
The material of the A Complete Client Onboarding Procedure as per AML & MiFID course is provided both in PDF slides and online video recordings, suitable for self-paced learning. Learners enrolled in the course have the flexibility to learn wherever and whenever.
Upon completion of the course, learners can evaluate their comprehension of the covered material by answering a series of questions reflecting the gained knowledge.
The completion of this course counts towards the Continuous Professional Development (CPD) annual requirements for professionals, and holders of the CySEC Advanced, Basic and AML certifications.
