Re-KYC in AML Compliance: A Complete Step-by-Step Guide

Re-KYC Process
in AML Compliance
The Role of
info@amluae.com www.amluae.com

Table of Content
01 Introduction 1
02 What is Re-KYC? 3
03 Why is Re-KYC of customers essential? 5
07 FAQ 21
08 About us 23
06 19
AMLUAE – Your partner for conducting re-KYC of customers
05 14
Best practices in re-KYC of customers
04 10
Steps of the Re-KYC process

Additional Information and Resources:
KYC is a critical AML compliance requirement for regulated entities in the UAE. It
lets you know your customers better and gauge the risks associated with their
transactions. Nowadays, authorities are also stressing on the need for re-KYC of
customers to keep track of updated information. Let us learn the role of Re-KYC
process in AML compliance and strengthen our defences against money
laundering and terrorist financing.
The role of Re-KYC process in AML Compliance
Article:
2

KYC must not be a one-time event. As customers’ details and regulations change,
you must also update these data points in your database. That is why re-KYC of
customers is essential. Re-KYC means periodic updates of the customers’ KYC
details.
For a smooth conduct of the re-KYC process, you must invest your time, effort, and
money in it. Recollect the information on customers, verify them, and add them to
your database. This must lead to accurate and up-to-date details on all your
customers. You also need to carry out sanctions screening and customer risk
assessment to classify customers into low-risk, medium-risk, and high-risk
customers and apply suitable countermeasures to fight against the risks they
pose.
4

Why is Re-KYC of
Customers Essential?

Re-KYC of customers is essential for every regulated entity for the following
reasons:
6

AML/CFT Policy and Procedures
AML/CFT policy and procedures mandate the KYC refresh. Depending upon the
local rules and regulations and the risk-based approach adopted by the
regulated entity, the schedule for periodic review is predecided and triggered. For
example, the organisation may have a policy to conduct re-KYC every year for
high-risk customers, once every two years for medium-risk customers, and once
every three years for low-risk customers.
Industry Transformations
Post-COVID, business models have significantly changed. Some of the old
industries do not exist anymore or have undergone significant changes. The
associated ML/TF risks have changed. Re-KYC helps understand customer profiles
in the changed context, align risks, and take appropriate countermeasures to
fight ML/TF.
Change in Customer Profile
Like fluctuations in your business, your client’s business or profile also witnesses
changes. For example, they expand to a new territory, add a new product or
service line in their offerings, have new owners, change the source of funds, or
something else. These types of deviations in your clients change their risk profiles.
To incorporate the amendments in their risk profiles, you must conduct re-KYC of
customers.
Internal Shifts
Your business is unique, with its own set of requirements, business models,
objectives, capabilities, and procedures. Based on these factors, you also define
your risk appetite to tolerate money laundering risks. Any internal shifts in these
factors lead to a change in your risk appetite. This leads to changes in your AML
measures and compliance policies. In such situations, re-KYC of customers is
essential.
7

Importance of AML/CFT measures
Article:
What are the basic elements of AML Policy in UAE?
Infographic:
Video on Elements of an effective AML Policy and Procedures
Video:
Regulatory Amendments
To keep up with the regulatory changes, you may be required to gather additional
information about customers. Re-KYC helps gather that information and comply
with legal requirements.
FATF Greylisting of a Country
If a country is greylisted, you need to take a risk-based approach and require your
customers to furnish additional information as to the source of funds and source
of wealth. Re-KYC helps you do that.
FATF Blacklisting of a Country
If a country is blacklisted, you need more information about your customers in
high-risk jurisdictions, and hence Re-KYC or KYC refresh is required.
8

Due to all these reasons, it becomes essential for regulated entities to conduct the
re-KYC process. Whether you conduct it twice a year or once every two years, the
aim is to have updated information. Such up-to-date and accurate data
facilitates the correct risk profiling of the customer. Based on this, you can take a
risk-based approach for further AML compliance initiatives. Thus, you can prevent
money laundering and terrorism financing activities.
Another benefit of the KYC process is a better understanding of your customers.
You can tailor your services to their needs to improve customer satisfaction. Thus,
you can also enhance your customer relationships with the re-KYC of customers.
What are FATF Blacklist and Grey list countries?
Article:
Updated list of FATF high-risk countries and countries under increased monitoring
Article:
Know Your Customer (KYC) requirements under AML regulations in UAE
Infographic:
Video on Know Your Customer Process under UAE AML Regulations
Video:
9

You have the reasons and benefits of the re-KYC process. But what are the steps
of conducting this process?
The re-KYC process involves the following steps:
11

Step 1: Client Communication
The first step of the re-KYC process is letting your customers know you will
conduct KYC again. Communicate to them the reasons for this exercise and its
importance. Inform them about the documents you will need for re-KYC.
Step 2: Information Collection
Once you have identified the customers for whom you want to repeat the KYC
process, list the necessary details. You might need some past information as well
as dig some new details. Collect all those data points from customers.
Step 3: Information Verification
In the next step, verify all the customer details with the necessary documents
received from them. You must ask them for proof of identity and address,
beneficial ownership, sources of funds, payment methods used, and other
necessary documents. Match the details submitted by clients with these
documents.
A Complete Guide to ID Verification: Best Practices and Tools
Article:
Key Risk Indicators Linked to Customer Address Verification
Infographic:
Video on the Complete Guide on Identity Verification
Video:
12

Step 4: Screening
Screen your customers against lists of sanctions, terrorists, watchlists, PEPs, or any
other local and international list of criminals. Moreover, check for adverse media
or social media mentions of crime-related activities.
Step 5: Risk Assessment
Assess each bit of information on your customers. Examine every slight suspicion
you have about them based on their behaviour, transactions, and profile
changes. Based on these results of such analysis, update their risk profile. Keep an
eye on those customers whose risks have increased.
How do you do a Sanction Screening?
Article:
A Comprehensive Guide to AML Customer Risk Assessment for DNFBPs in UAE
Article:
Risks of Unaddressed Matches in Sanctions Screening
Infographic:
Key factors for Customer Risk Assessment under AML regulations
Infographic:
Video on Sanction Screening in UAE
Video:
Video on Factors for AML Enterprise Wide Risk Assessment
Video:
13

Best practices in
Re-KYC of Customers

For the smooth and accurate performance of the re-KYC process, avoid making
the most common errors. You can imbibe the following best practices for
successful re-KYC process and quality outcomes:
15

Establish Re-KYC Procedures
AML compliance is not an easy journey. You have to manage quite a few
procedures to ensure you comply with all the requirements. KYC is one such
procedure. It helps you better know your customers to prevent or mitigate their
risks. So, give it the importance it deserves.
Define a strategy for conducting re-KYC of customers. Mention the steps. List the
timelines, resources required, and budget for the re-KYC process. Also, define the
potential challenges you might face in this process, like customers’ disagreement,
and the steps to deal with them. Such a strategy enables a seamless process.
Implement KYC Software
KYC is a lengthy process. If you do it manually, it takes a lot of time. Also, it requires
special skills to manage this exercise without errors and hassles. So, you need to
spend money on hiring skilled staff as well. Also, the manual process has
increased the chances of errors. All these can affect your re-KYC process.
So, the best solution to all these problems is automating the re-KYC process. Such
a solution will lead to accurate results, faster processes, and customer ease. Also,
these KYC solutions raise an alert when they detect an anomaly, suspicion, or shift
from the usual behaviour. Thus, you are better equipped to fight money
laundering risks.
AML Case Management Software: Significant element of AML Compliance
Article:
Switching Sanctions Screening Software: Pain or Gain?
Infographic:
16

Take a Risk-based Approach
AML compliance is all about a risk-based approach. You have to decide the next
action based on your customers’ risk levels. The same is the case with re-KYC. For
high-risk customers, the frequency of re-KYC is higher. So, you must know whether
your customer is high or low risk and when you last conducted their KYC.
So, if the customer is high risk, conduct a re-KYC frequently. If the risk is low,
postpone it for later. Thus, you can decide the frequency and depth of your KYC
procedures.
Customer Communication is Key
Inform your customers about the re-KYC process. They must be aware of the
purpose of such data collection and document verification. It is also a good
practice to obtain their consent to this exercise. Inform them about the
documents needed, the time taken, and other necessary details. Constant
communication from your side facilitates better relationships with customers.
Since it will be a disturbing and problematic exercise for your customers, explain
its significance to them.
The risk based approach to AML - Anti-Money Laundering Compliance
Article:
Mastering Risk-Based Approach: 7 Deficiencies to conquer
Infographic:
17

Allocate Proper Resources
Re-KYC is not an administrative process. It is not a scheduled thing that you do
away with by just following the steps. It needs your complete dedication and
sincerity. It will help you stay away from risky customers and transactions. Thus, it
is a part of your business’s risk prevention and mitigation plan.
So, you must give it much importance. Don’t forget to allocate skilful resources, a
reasonable budget, and specific timelines to this exercise. Also, ensure that you do
not destroy customer relationships while managing this procedure.
Ensure Proper Record-keeping
You must document every result and finding of the re-KYC process. Since you are
analysing the client again and rebuilding the risk profile, the rationale behind it
must be saved and secured. So, maintain proper records of each data point on
the customer. Save the documents. These records help you during audits or
investigations by regulatory authorities.
These six effective approaches can help you with a successful re-KYC process.
Ensure that you imbibe them and follow the step-by-step journey. Do not forget to
conduct a re-KYC of customers to be doubly sure of their risks to your business.
Only with such re-KYC and due diligence can you strengthen your AML measures.
Why is Record-Keeping of Customer Identity and Transactions necessary?
Article:
AML compliance challenges associated with inadequate record-keeping
Infographic:
18

AMLUAE
Your Partner for Conducting
Re-KYC of Customers

AMLUAE is a prominent provider of AML compliance services in the UAE. We help
you follow AML regulations in the UAE at every step. You needn’t worry about
deadlines or regulatory updates; we handle everything on time and in
compliance.
We also handhold you through the entire KYC and re-KYC process. Our
consultants and AML experts conduct customer due diligence on your clients for
accurate results. Ultimately, you will have each customer’s detailed risk profile to
enable you to take a risk-based approach to your AML compliance.
Besides KYC and due diligence, we also help monitor transactions to detect
suspicious ones. Our team can impart personalised training to your employees,
create and implement AML policies, and manage all communication with
regulatory authorities. The aim is to let you focus on your core business while we
manage the AML compliance.
20

Re-KYC stands for KYC refresh. KYC means Know Your Customer. KYC refresh, or
Re-KYC is the periodic update of a customer’s KYC details. KYC is an important
component of Anti-Money Laundering (AML) compliance.
What is the KYC refresh process?
Re-KYC helps businesses gain a better understanding of their customers and
mitigate high-risk situations.
What is the purpose of Re-KYC?
re-KYC is necessary to track updated customer information and strengthen
defences against money laundering and terrorist financing. It can be required for
the following reasons:
• AML/CFT policy and procedures
• Industry Transformations
• Changes in customer profile
• Internal Shifts
• Regulatory Amendments
• FATF greylisting or blacklisting of a country
Why is Re-KYC required?
If KYC is not regularly updated, a reporting entity may encounter high positives or
high negatives.
What happens if KYC is not updated?
KYC updates can vary based on organisational requirements. The frequency of
re-KYC for high-risk customers is higher. For example, as per its internal policy, an
organisation may conduct re-KYC every year for high-risk customers, once every
two years for medium-risk customers, and once every three years for low-risk
customers.
How many times does KYC need to be updated?
22

AML UAE is an Anti-Money Laundering (AML) consulting firm with decades of
experience supporting businesses across the UAE.
We have expertise in providing various AML services to DNFBPs, such as
Lawyers, Real Estate Agents, Accountants and Auditors, Dealers in Precious
Metals and Stones, and Company Service Providers. We also provide AML
consultancy services to Virtual Asset Service Providers.
We are equipped to help you register on the goAML portal. We conduct
Enterprise-Wide Risk Assessments and align your AML/CFT policies and
procedures in line with them. We design customized forms and templates for
carrying out KYC, Customer Risk Assessment, and Enhanced Due Diligence for
your customers. We help you prepare and submit reports like SAR, STR, FFR,
PNMR, HRC, HRCA, DPMSR, etc. We ensure that your employees are well-trained
from an AML perspective.
Not just this, we assist regulated entities with decoding the Remedial Action
Plan and effectively implementing the authority’s recommendations around
the AML program.
AML UAE is your go-to partner for handling all your compliance-related
requirements.
Once we enter the picture, AML compliance is ensured. With that, you can
continue to be a highly reputed business, actively striving to counter money
laundering, terrorist financing, and proliferation financing.
AML Compliance Simplified!
24

Ensure legal
compliance
Save time
and costs
Need expert
support
Automate
compliance
processes
Implement
best
practices
Crisis
management
Change
AML/CFT
consultant
Value Proposition
Service
goAML Registration
Enterprise-Wide
Risk Assessment
AML/CFT Policy Drafting
In-house Compliance
Department Set-up
KYC Managed Services
Ongoing AML/CFT Consulting
AML/CFT Health Check
AML Training
AML Software Selection
Screening Software
Validation
Regulatory Reporting
Streamlines the process of creating and submitting SAR, STR,
PNMR, FFR, DPMSR, REAR, HRC, and HRCA reports accurately
and on time.
Tests and validates screening tools to ensure they meet
regulatory requirements and operational needs.
Helps choose the best AML software that fits the company’s
needs, improving efficiency and cost-effectiveness.
Offers comprehensive training programs that enhance the
compliance skills of employees at all levels.
Conducts comprehensive reviews and assessments to pinpoint
vulnerabilities and recommend improvements.
Continuous expert advice tailored to address specific challenges,
enhancing overall compliance strategies.
Outsourced KYC processes that speed up customer onboarding
and maintain high compliance standards.
Establishes a robust internal compliance structure, helps recruit
the right resources and ensures ongoing compliance efficiency.
Provides tailored AML/CFT policy frameworks that are up-to-date
with current laws, enhancing regulatory compliance.
Identifies risk factors, gross risk, controls deployed and their
effectiveness, residual risk, and need for additional controls.
Streamlines the process of registering with the UAE FIU goAML
portal. Ensures compliance and reduces administrative burden.
Common Drivers
Service Matrix
25

Pathik Shah
Founder
CAMS, FCA, CISA, CS, DISA (ICAI), FAFP (ICAI)
Pathik is a Chartered Accountant with over 25 years of experience in
compliance management, Anti-Money Laundering, tax consultancy, risk
management, accounting, system audits, IT consultancy, and digital
marketing. He has extensive knowledge of local and international Anti-Money
Laundering rules and regulations. He helps companies with end-to-end AML
compliance services, from understanding the AML business-specific risk to
implementing the robust AML Compliance framework. Pathik leads the firm
from the front and is responsible for giving it strategic direction.
Jyoti Maheshwari
Partner
CAMS, ACA
Jyoti is a Chartered Accountant and Certified Anti-Money Laundering Specialist
(CAMS) with around 7 years of hands-on experience in regulatory compliance,
legal advisory, policy-making, tax consultation, and technology project
implementation. Jyoti holds experience with Anti-Money Laundering regulations
prevalent across various countries. She helps companies assess risk, design and
deploy adequate mitigation measures, and implement the best international
practices to combat money laundering and other financial crimes.
Our Team
26

Dipali Vora
Partner
CAMS, ACS
Dipali is an Associate member of ICSI and has a Bachelor's in Commerce and a
General Law degree. She has an overall experience of 7 years in the compliance
domain, including Anti-Money Laundering, due diligence, secretarial audit, and
managing scrutinizer functions. She currently assists clients by advising and
helping them navigate through all the legal and regulatory challenges of
Anti-Money Laundering Law. She helps companies develop, implement, and
maintain effective AML/CFT and sanctions programs.
She knows Anti-money laundering rules and regulations prevailing in GCC
countries and specialises in Enterprise-Wide Risk Assessment, Customer Due
Diligence, and Risk Assessment.
27

The Role of Re-KYC Process
in AML Compliance
Follow us on:
info@amluae.com
www.amluae.com

Re-KYC in AML Compliance: A Complete Step-by-Step Guide

More Related Content

Similar to Re-KYC in AML Compliance: A Complete Step-by-Step Guide

More from AML UAE

Recently uploaded

Re-KYC in AML Compliance: A Complete Step-by-Step Guide