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QUESTION
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What information (aside from the basic personal identifiers and standard due diligence questions) do you need to obtain from the person sitting in front of you?
A new customer comes into your financial institution to open an account for a Personal Investment Company (PIC) organized/incorporated in an offshore jurisdiction?
Question: What information (aside from the basic personal identifiers and standard due diligence questions) do you need to obtain from the person sitting in front of you?
Only use the attached as a source
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APA |
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Answer
Information Required for Setting up a Personal Investment Company in an Offshore Jurisdiction
At the beginning of 2006, FinCEN issued a 31 CFR 1010.620 regulation to enable implementation of the private banking requirements of 31 USC 5318(i). The procedures outlined in section 31 USC 5318(i) evaluate the due diligence program of the bank concerning the private accounts given to non-U.S. individuals. Subsection (i) of the 31 USC 5318 requires each U.S. financial institution that manages a private banking account for a non-U.S. individual to take certain Anti Money Laundering (AML) measures concerning the accounts (FFIEC, 2015). Besides the basic personal identifiers and standard due diligence questions, the U.S. banks require more information to set up an offshore jurisdiction personal investment company. One of the information is that the private banking account must have a minimum aggregate deposit of funds of not less than 1 million or other assets of the same value.
Other than the minimum deposit, the establishment of the private bank account must be on behalf of or for the benefit of one or more non-U.S. people who are the direct beneficiaries of the account (FFIEC, 2015). Moreover, the person administering the private bank account in an offshore jurisdiction must be an employee, officer, or agent of the bank acting as a link between the financial institutions controlled by the law and the account beneficial owner. Additional information includes risk mitigation, which involves effective policies, processes, and procedures that can help the bank from becoming channel or victims of money laundering (FFIEC, 2015). Illegal activities through private banking could result in substantial costs and reputation risks to the bank. The bank should know the purpose and anticipated activity such as the size, types of services, and products.
References
Federal Financial Institutions Examination Council (FFIEC). (2015). Bank Secrecy Act/Anti-Money Laundering Examination Manual.
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