Background Check
A background check is the process of investigating an individual’s or entity’s history and activities to verify their identity, qualifications, and potential risks before establishing a business relationship. In banking, background checks are a key part of customer due diligence (CDD) and know your customer (KYC) procedures.
Background screening, Due diligence checks, KYC checks
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Examples
Before onboarding the high-net-worth individual as a private banking client, the bank conducted extensive background checks including verifying source of wealth, screening for political ties, and checking against global sanctions lists.
FAQ
What information is typically reviewed in a background check?
Background checks can include identity verification, credit checks, criminal records, employment and education history, professional licenses and affiliations, adverse media, PEP status, and sanctions screening.
How do background checks support anti-money laundering efforts?
By verifying a customer's identity and background, banks can better assess the risk that the customer may be involved in financial crimes like money laundering or terrorist financing. This allows banks to conduct enhanced due diligence on higher-risk clients.
Are background checks only performed during initial onboarding?
No, background checks should be regularly refreshed throughout the customer lifecycle, especially for higher-risk clients, to identify any changes in customer risk profiles over time. Perpetual KYC requires ongoing screening.
