KNOW YOUR CUSTOMER RULES FOR ADMINISTRATORS UNDER THE LAWS OF THE NETHERLANDS ANTILLES
True identity of customers must be established
Due diligence has to be performed by administrators and self-administered investment institutions on the (prospective) investors of the (self-) administered investment institution.
Investment institutions have the obligation to determine the true identity of their (prospective) investors, including where applicable the (ultimate) beneficiaries of their investors that are legal entities. The identification of the investors can be either performed by the administrator to which the administrative services pertaining to the investment institution has been wholly or partially outsourced, or by the self-administered investment institution. Administrators and self-administered investment institutions are required to obtain information on the purpose and intended nature of the business relationship with their (prospective) investors. The internal policies and procedures of the administrator and the self-administered investment institution should clearly describe which identification documents are acceptable for the acceptance of investors in the (self-)administered investment institution.
These policies and procedures should also include a description of the types of investor that are likely to pose a higher than average risk to the investment institution. These policies and procedures should ensure that (prospective) investors will not be accepted in case they fail to provide satisfactory evidence of their identity.
Administrators and self-administered investment institutions should also be able to retrieve the information received from investors, when needed, without any undue delay. Hence, the implementation of a checklist containing the identification and/or transaction information of investors and a centralized record keeping system should be in place. The execution of the “know your customer” policy should be a continuous process, even after the initial identification of the investor. The continuous process should include scrutiny of transactions undertaken throughout the course of the relationship to ensure that the transactions being conducted are consistent with the administrator’s and self administered investment institution’s knowledge of the investor, its source of funds, and its (business and) risk profile.
Administrators and self-administered investment institutions should conduct more extensive due diligence for high risk investors, including politically exposed persons (PEPs), families and associates of PEPs. The decision to accept such investors should be taken at senior management level. The administrator and self-administered investment institution should make reasonable efforts to ascertain that such high risk investor’s source of wealth is not from illegal activities. The administrator and self-administered investment institution should not accept or maintain a business relationship with an investor if the administrator knows or has reasonable grounds to believe that the funds were derived from corruption or misuse of public assets, without prejudice to any obligation the administrator and self-administered investment institution has under criminal law or other laws or regulations.
Administrators and self-administered investment institutions are required to ensure that documents, data or information collected under the due diligence process relative to the investor is kept up-to-date and relevant by undertaking reviews of existing records, particularly for higher risk categories of investors.
Administrators and self-administered investment institution should take necessary measures in preventing the unlawful use of entities identified as vulnerable, such as charitable or non-profit organizations, to be used as conduits for criminal proceeds or terrorist financing.
Karel Frielink
Curacao-based Attorney (lawyer) / Partner
