[Daz] its a brave new world....there are not now or soon will be..no secrets
BIS: Basel Committee on Banking Supervision
Banks that offer private banking services are particularly exposed to reputational risk, and should therefore apply enhanced due diligence to such operations.
Private banking accounts, which by nature involve a large measure of confidentiality, can be opened in the name of an individual, a commercial business, a trust, an intermediary or a personalised investment company.
In each case reputational risk may arise if the bank does not diligently follow established KYC procedures.
All new clients and new accounts should be approved by at least one person, of appropriate seniority, other than the private banking relationship manager.
If particular safeguards are put in place internally to protect confidentiality of private banking customers and their business, banks must still ensure that at least equivalent scrutiny and monitoring of these customers and their business can be conducted, e.g. they must be open to review by compliance officers and auditors
Banks should develop “clear standards on what records must be kept on customer identification and individual transactions and their retention period”. Such a practice is essential to permit a bank to monitor its relationship with the customer, to understand the customer’s on-going business and, if necessary, to provide evidence in the event of disputes, legal action, or a financial investigation that could lead to criminal prosecution.
As the starting point and natural follow-up of the identification process, banks should obtain customer identification papers and retain copies of them for at least five years after an account is closed. They should also retain all financial transaction records for at least five years after the transaction has taken place
Banks should never agree to open an account or conduct ongoing business with a customer who insists on anonymity or who gives a fictitious name.
Nor should confidential number accounts function as anonymous accounts but they should be subject to exactly the same KYC procedures as all other customer accounts, even if the test is carried out by selected staff.
Whereas a numbered account can offer additional protection for the identity of the account-holder, the identity must be known to a sufficient number of staff to operate proper due diligence.
Such accounts should in no circumstances be used to hide the customer identity from a bank’s compliance function or from the supervisors.
Trust, nominee and fiduciary accounts can be used to circumvent customer identification procedures.
While it may be legitimate under certain circumstances to provide an extra layer of security to protect the confidentiality of legitimate private banking customers, it is essential that the true relationship is understood.
Banks should establish whether the customer is taking the name of another customer, acting as a "front", or acting on behalf of another person as trustee, nominee or other intermediary.
If so, a necessary precondition is receipt of satisfactory evidence of the identity of any intermediaries, and of the persons upon whose behalf they are acting, as well as details of the nature of the trust or other arrangements in place.
Specifically, the identification of a trust should include the trustees, settlors/grantors and beneficiaries