KYC Documents Checklist – Ensuring Compliance and Security for UAE

The financial world is currently facing a huge risk and threat against scams, money laundering, and other anti-social crimes.

Government authorities and banks face scams worth millions each other due to such scams. With the advancement in technology, these scams have become more and more powerful and difficult to trace.

In such a scenario, the need for a robustly secure and authoritative system is felt. Experts and professionals have etched down that the system needs to be started at the very basic level i.e., the customers.

This is where the KYC system was introduced after multiple major cases of money laundering, terrorist attacks, global financial and economic downfalls, and many more events.

What does KYC Documents Mean?

KYC documents have become one of the most important documents in the banking and finance world. KYC stands for Know Your Customer. KYC documents are a set of strictly guided and regulated documents that need to be submitted by the customer when they engage in business or financial transactions with some institution, most commonly a bank or government authority. 

KYC documents are most commonly documents that verify the identity of a customer. As the name suggests, it helps the financial institution to identify and know its customers better and have in-depth knowledge about their work, financial stability, and much more.

Moreover, it gives the business a clear look into how the customer is performing before making the transaction i.e., how risky or safe it is to get involved in the particular business.

All of these steps are taken in light of the situation that financial institutions have faced and are facing many cases of fraud and money laundering, along with a major case of money directed towards terrorist groups. Taking a proper KYC from the customer allows one to regulate and oversee transactions.

Know the KYC Documents Checklist in UAE

Over the last few decades, the UAE has become an economic hub of the world, controlling a major portion of the trades held in the Middle East along with other nations such as Saudi Arabia and Qatar.

As the penetration of the economy has happened, multiple domestic and international companies and businesses have found their way into the country for trade.

UAE is one of those few nations that has introduced multiple free trade zones for both domestic and foreign businesses. However, there has been a downside in this process. It has been seen that the rate of money laundering and provision of funds for terrorism purposes has increased drastically.

Compliance Policy for Crimes like Laundering and Fraud

As a result, the compliance and safety authorities in UAE which is the Central Bank of the UAE (CBUAE) have undertaken strict means to regulate such crimes. They have set up special departments to tackle this problem one of which is the AML-CFT (Anti-Money Laundering and Combating Financing of Terrorism) regulatory department.

CBUAE has set up multiple measures to confront these problems amongst which KYC application is deemed to be one of the most important and effective means of fighting crimes like money laundering and financial frauds.

Since then KYC documents have become the most important set of documents for setting up any businesses in the UAE. Under these regulations, the authorities have managed to tackle criminal and money laundering activities to a huge level. Moreover, these regulations and practices have allowed trade and economy to flourish in the country.

Under the system of verifying businesses through KYC, CBUAE has set up two distinct types of KYC documents.

1) Business KYC Documents

These documents are specifically intended for mainstream businesses and large-scale traders.

2) Corporate KYC documents

These sets of KYC documents are intended for corporations that set up their work in the UAE. The corporate sector mostly includes private institutions including banks, IT companies, etc.

Are your Documents Compliant for KYC Submission?

The authorities like the government of UAE, the finance ministry, and the direct regulatory authority of finance and economy, CBUAE have set up strict rules and regulations in the country.

These rules are intended for the people who indulge in any kind of financial transaction or business in either the normal trade zones or the free trade zones within the UAE. You can check the list of regulations on the KYC Square website.

All these regulations are for both local and foreign individuals or residents. While the documentation and verification process for individuals is quick and easy, the ones meant for full-scale businesses and companies are detailed.

The KYC that every party needs to submit before transacting within the UAE is mainly derived to verify and identify the customers.

If you are an individual looking to open a bank account or perform some kind of transaction in the UAE.

Here are the required documents for KYC, that you can submit through the KYC Square platform:

• ID proof
• Travel document (only if you are coming from a foreign area)
• Proof residential address

On the other hand, as a business or company, you would need to submit more documents. These are required to start a trade securely within the trade zones in the UAE. Here are the required documents for a successful KYC process through the KYC Square website:

• ID proof of all shareholders having a holding percentage over 25%
• Travel documents of all shareholders having a holding percentage over 25% (only if it is a foreign business or company)
• Trade license or a valid certificate of incorporation from a competent authority
• Proof of a local and operating address within the UAE. These documents include any type of utility bill or a local bank statement for the past three months from the date of application
• Memorandum and articles of association from a competent authority
• A joint resolution of the Board of Directors of the company stating the joint consent to opening a bank account
• ID proof of those who are allowed and designated to operate the aforesaid bank account

What are the Penalties for Non-Compliance?

In many cases, financial institutions fail to report any criminal or suspicious activities, be it intentionally or non-intentionally. Whatever the case may be, the compliance authorities thoroughly check the root cause for the non-report of such cases.

If the financial institution is found guilty of not reporting the crimes intentionally, they are penalized heavily.

Financial institutions face the following charges

If fraud and suspicious activities are not reported, the manager and involved employees face prison time and fines between AED 100,00 to AED 1,000,000 approximately.

If any other cases from the AML-CFT regulations are violated, company heads can face imprisonment and fines between AED 10,000 to AED 100,000 approximately.

Conclusion

With the rules for KYC documentation changing at all times, you can visit our website KYC Square for an in-depth consultation from the experts. You can also access our demo tool for a limited period at no extra cost. If you have doubts regarding specific services, our experts are always at your perusal for customized services.