Know your customer (KYC) – why does the bank ask?
Banking is based on trust. The ingredients of trust are good service, the right decisions and the fact that the bank knows its customers. We want to know our customers well in order to be able to meet their needs in the best possible way. Legislation also imposes obligations on banks to know and identify their customers.
A corporate customer is identified on the basis of a document from a reliable source, such as an extract from the Trade Register. The extract from the Trade Register must not be more than 3 months old. In addition, the identity of the company's representative is verified from identity documents accepted by the bank.
In addition to the details concerning identity, the bank must have sufficient information on the owners of the company, the nature and extent of the business operations, business partners, the company's financial position, the company's need for banking services and the purpose for which the banking services will be used. This is the reason why the bank may ask customers questions concerning not only their use of banking services, but also account transactions volumes, their origin and purpose.
Legislation requires the bank to investigate if the customer is liable to pay tax in the US (FATCA) or a politically exposed person (PEP) or family member or a close associate of a PEP. As far as our corporate customers are concerned, this means that we investigate whether the owners or representatives of a company are PEPs and hold such a position that it should be taken into account in the company's banking. In addition, the bank has to identify the corporate customer's beneficial owners, in other words, those private persons who own at least 25% of the company or otherwise exercise authoritative powers in the company.
The bank must obtain these persons' basic details and verify their identity from an identity document if necessary.
If the bank does not obtain all necessary or sufficient information to establish a customer relationship or to support a business transaction, it shall according to law refuse to establish a customer relationship or carry out a transaction. All documents provided to the bank by the customer will be treated confidentially in accordance with the Finnish bank secrecy regulations.
If you have questions on this subject, see frequently asked questions and answers tor contact Nordea Corporate Service (0200 2121; service in English) Mon–Fri 10.00–16.30 (local network charge/mobile call charge).
Please note that Nordea cannot provide tax advice related to the FATCA act. If you have taxation-related questions, contact a taxation specialist or refer to the IRS website.