KYC protocols can be an obstacle for investors

Preventing never-ending KYC demands

All around the world, customers are complaining about the KYC overkill…rightly or wrongly we may say. They are asked the same information and the same documents by different service vendors over and over again even for a single transaction.

KYC case scenario: investing in property overseas

Pierre is an entrepreneur who has deposited his salaries and business earnings over the years with Bank A. He intends to use a small part of his bank savings and take a loan from Bank A to purchase a flat overseas.  He sets up a company overseas to buy and hold the property because he has been informed that it is the sensible thing to do in this situation. For the company formation, Pierre receives a KYC request from the company formation agent, the accountancy firm that will provide accounting services and the bank with which the company will open an account.  For buying the property, Pierre has to submit the same KYC to the property agent and the conveyancing lawyer.  Pierre asks for a valuation before signing the deal, and the valuer asks for the same KYC. The Bank insists on fire insurance cover before disbursing the loan, and Pierre has to satisfy the insurance broker with KYC.  Everybody wants KYC duly certified in original with a wet ink signature. Certifying documents like passport and proof of address is not all.  The most critical measure of KYC is a source of wealth and a source of funds.  So now everybody wants to understand how he made his money (his source of wealth – SOW) and what is the origin of the money he is using to do his property investment (his source of funds – SOF).  The company formation agent, the property agent and the conveyancing lawyer want a declaration of SOW-SOF from him and further want to see supporting documents to justify the declaration.

NWT guides clients to overcome the hurdles of KYC protocols

Setbacks that are usually encountered

Pierre has been a customer of Bank A since he was born. His junior bank account opened since his childhood days became his young salaried employee bank account and has remained his principal bank account ever since, accompanying him in his entrepreneurial days. He is told that a bank statement is not a source of funds document as a bank account is merely a place where money is kept.  Pierre explains that he is taking a loan to finance 90% of the property cost, so why would they need his payslips and financial accounts of his business. But then they also want to know how he will finance the repayment of that loan, which Pierre has thought was the legitimate concern of his Bank only, right?… Well, it depends on the risk appetite of each vendor and how each one of them has risk-assessed Pierre, etc. To add to Pierre’s frustration, the seller of the flat also wants to have information on his source of funds.  The seller argues that he has to satisfy his own bank and his own trustees that the funds he will receive are legitimate. But the flat is being sold at market price with proceeds paid by a regulated bank and handled by a regulated conveyancing lawyer and both have assessed the overall KYC and source of funds of Pierre.  Although Pierre is not an expert on banking and finance, he sincerely feels there is now a KYC overkill and interference into his privacy.

How NWT can provide a solution

Pierre is advised by an old friend to engage NWT, as his Trustees to look after his private wealth. The Trustees will onboard Pierre and conduct KYC under international norms. Pierre can focus on finding the flat that he desires, and the Trustees will take over the execution. The Trustee will liaise with all the vendors and provide them the assurances they require. Information and documents will be provided as deemed necessary on a Need-to-Know basis only.

NWT is licensed by the Financial Services Commission in Mauritius and by the Association Romande des Intermédiaires Financier (ARIF), a self-regulatory body approved by the Swiss Financial Market Supervisory Authority (FINMA) in Switzerland.

Speak to us today if, like Pierre, you need help with your private wealth management.

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