Customer Identification and Due Diligence Policy (KYC / CIP / KYB)
Customer onboarding, beneficial ownership, risk-based due diligence, and the treatment of consumers who reach the Company through its customers' platforms.
| Field | Value |
|---|---|
| Document | Customer Identification and Due Diligence Policy |
| Version | 1.0 |
| Owner | AML Compliance Officer |
| Review | Annual, or on material program change |
Authorities
This policy implements, within the sponsor bank's program:
- 31 CFR 1020.220, the Customer Identification Program rule: identity information collected and verified before an account is opened, with recordkeeping.
- 31 CFR 1010.230, the beneficial ownership rule: identifying and verifying the beneficial owners and a controlling person of each legal-entity customer.
- FinCEN's Customer Due Diligence rule (2016) and the sponsor bank's own CIP and CDD program, which govern risk-based due diligence and ongoing monitoring.
- FFIEC BSA/AML Examination Manual, the Customer Identification Program and Customer Due Diligence sections, which set the examination expectations the program is measured against.
1. Purpose and Scope
This policy sets out how the Company identifies and verifies the customers it onboards, collects and verifies beneficial ownership information, applies risk-based due diligence, and handles consumers who reach the Company through a customer's platform. It supports the customer due diligence requirements at 31 CFR 1020.220 and the beneficial ownership requirements at 31 CFR 1010.230 as they apply within the sponsor bank program, and it is designed to support the sponsor bank's own customer identification and due diligence program. The Company coordinates customer onboarding with the sponsor bank under the program agreement.
2. Who the Company Onboards
The policy distinguishes three relationships:
| Relationship | Description | Obligation |
|---|---|---|
| Direct customer | The business or individual that contracts with the Company for its services | Full identification, verification, due diligence, and beneficial ownership under this policy |
| Consumer via a customer's platform | An individual who funds or receives payouts through a direct customer's platform | No direct identification obligation; consumer verification is the customer's responsibility under its own program. The Company obtains and relies on the customer's representations |
| Subprocessor or sub-merchant | A third party a customer uses to process payments through the Company's infrastructure | Understood at onboarding; treated as a customer for verification purposes if it accesses the Company's services directly |
Where consumers reach the Company only through a customer's platform, that treatment rests on the premise that the consumer is the customer's customer, the consumer's interaction is with the customer's platform, and the customer holds the licenses, disclosures, and program obligations that apply to consumers.
3. Customer Onboarding
3.1 Onboarding Platform
The Company uses an identity verification platform configured to collect the document sets this policy requires, run watchlist screening, verify beneficial ownership, and produce an onboarding record for the case management system.
3.2 Required Information
Before any account is activated or any transaction is processed, the Company collects and verifies: legal name; principal place of business and registered address; tax identification number; formation documents; ownership structure at the 25 percent beneficial ownership threshold; a description of the business and its purpose; any licenses the business requires; expected transaction volumes by rail; and key business, compliance, and technical contacts.
3.3 Identity Verification
The Company verifies each customer's identity through validation of the tax identification number against authoritative records; verification of the legal name against formation documents and business registries; address verification through documentation or registry cross-check; sanctions screening of the entity name and address against the specially designated nationals list, the consolidated sanctions list, and any additional lists the sponsor bank specifies; adverse media screening of the entity and its principals; and, for licensed businesses, verification of the license against the issuing authority's registry.
4. Beneficial Ownership
4.1 Requirement
For each customer that is a legal entity, the Company collects beneficial ownership information for every natural person who owns, directly or indirectly, 25 percent or more of its equity, and for one individual with significant responsibility for controlling, managing, or directing it.
4.2 Collection
The customer's authorized representative completes and certifies a beneficial ownership certification at onboarding, providing for each beneficial owner and control person their full legal name, date of birth, residential address, a government identification number, and, for equity owners, the ownership percentage.
4.3 Verification
The Company verifies the identity of each beneficial owner and control person through document review, database checks, and, for higher-risk individuals, enhanced verification, and screens each against sanctions lists and adverse media.
4.4 Complex Ownership Structures
Where a beneficial owner is itself a legal entity, the Company looks through to the natural persons who own 25 percent or more of that entity until natural persons are identified. A publicly traded owner is documented by name and exchange listing. A structure whose beneficial owners cannot be identified after reasonable investigation triggers enhanced due diligence and, if unresolved, escalation to the AML Compliance Officer for a go or no-go decision. A customer that refuses to provide beneficial ownership information is not onboarded.
5. Risk-Based Due Diligence Tiers
The Company assigns each customer a risk tier at onboarding and reviews it at each periodic review.
| Tier | Customer profile | Due diligence | Approval |
|---|---|---|---|
| Tier 1, Standard | Licensed or otherwise regulated businesses in good standing, no adverse media, no high-risk ownership | Standard verification, standard beneficial ownership verification, expected-volume review | AML Compliance Officer or designee |
| Tier 2, Enhanced | Businesses with an unusual or unlicensed model, complex ownership, politically exposed owners, elevated-risk geographies, or an unusual expected transaction profile | Tier 1 plus business-model review, source of funds, additional ownership documentation, senior management review | AML Compliance Officer |
| Tier 3, High risk | Businesses with adverse media, sanctions-adjacent ownership, prior declines by other institutions, or any customer the sponsor bank flags | Tier 2 plus source of wealth for material owners, a call with senior management, and a written memo of the risk rationale and approval | AML Compliance Officer with sponsor bank pre-approval before activation |
Before onboarding the first customer of any business type the sponsor bank may consider outside the program's scope, the AML Compliance Officer confirms the sponsor bank's written position on that type.
6. Consumers Reaching the Company Through a Customer's Platform
Where the Company processes consumer transactions on behalf of a customer, the Company does not perform consumer identification. At onboarding the Company obtains a written representation that the customer operates a compliant consumer identification and anti-money-laundering program consistent with its licenses and obligations; for Tier 2 and Tier 3 customers it also collects evidence of that program. The Company's transaction monitoring includes rules calibrated to detect anomalous consumer funding patterns in the aggregate flows on its rails. Consumer disclosures and complaints remain the customer's obligation; a consumer complaint that reaches the Company is redirected to the relevant customer.
The customer agreement includes representations and warranties that the customer operates a compliant consumer program, holds all applicable licenses and approvals, will notify the Company immediately if a license lapses or its program becomes the subject of regulatory action, and will provide access to its consumer compliance records on request to support sponsor bank review or examination.
7. Ongoing Monitoring and Periodic Review
7.1 Ongoing Monitoring
The Company monitors customer accounts for transactions inconsistent with the profile established at onboarding; changes in business model, ownership, or licensing; adverse media or regulatory actions involving the customer or its principals; sanctions or watchlist hits on the entity, its principals, or its beneficial owners, including re-screening of the existing customer book whenever the lists change; and consumer-level anomalies surfaced by transaction monitoring.
7.2 Periodic Review Schedule
| Tier | Review frequency | Out-of-cycle triggers |
|---|---|---|
| Tier 1 | Annual | Adverse media; material change in transaction patterns; customer-reported change in ownership or licensing; sponsor bank request |
| Tier 2 | Every six months | Tier 1 triggers, plus any suspicious activity escalation and any regulatory action in the customer's jurisdiction |
| Tier 3 | Every three months | Tier 2 triggers, plus any adverse media, any change in beneficial ownership, and any sponsor bank or regulator request |
7.3 Account Changes
A material change to an account, such as new product access, a significant increase in limits, a change in beneficial ownership, or a new beneficial owner, is treated as a partial refresh: updated documentation is collected, watchlist screening is re-run, and the risk tier is reassessed. Material changes require AML Compliance Officer approval.
8. Customer Offboarding
The Company suspends or terminates a customer that fails to provide required documentation or beneficial ownership information within 30 days of request; whose screening returns a confirmed sanctions hit on the entity or a beneficial owner; whose required license lapses or is revoked and cannot be renewed within 60 days; that is the subject of a suspicious activity report filed by the sponsor bank or a law-enforcement referral related to the program; or that the AML Compliance Officer, in consultation with the sponsor bank, determines poses unacceptable risk. Offboarding decisions are made by the AML Compliance Officer, the sponsor bank is notified before accounts are closed, and the customer is never told that it is under investigation or that a report may have been filed.
9. Recordkeeping
All identification records, beneficial ownership certifications, due diligence documentation, and periodic review records are retained for at least five years from the date of offboarding, in a format accessible for sponsor bank review and regulatory examination.
10. Effective Date and Approval
This policy is approved by the AML Compliance Officer, reviewed annually or on any material program change, and provided to the sponsor bank's compliance team.