Relatives and Close Associates (RCA)
Relatives and Close Associates refers to individuals who have a close relationship with a high risk client, most commonly a Politically Exposed Person or PEP. Just like a PEP, these persons are considered to be at a higher risk of money laundering, the financing of terrorism and similar financial crimes and therefore need to be monitored more closely. Namely, when performing KYC, RCAs will often be put through Enhanced Due Diligence to better manage the potential risk that comes with taking them on as a customer.
RCAs are most commonly family members of PEP or other high risk clients. However, romantic partners, close friends and business partners can often be considered RCAs as well. How many individuals are included under this term can vary depending on the jurisdiction as well as the risk appetite of the financial institution in question.
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RCA
Examples
A person initiates the process of opening a new bank account. During the KYC process, the bank’s due diligence system flags the person as a PEP since they show up on a list of active members of parliament in the UK. The bank therefore initiates Enhanced Due Diligence and performs additional checks, such as an adverse media check, additional verification, and looking at Relatives and Close Associates.
They check the person’s wife, children, and known business partners to check whether any of them are involved in or suspected of committing financial crimes. After finding no red flags for both the MP nor their RCAs, the bank approves their account but keeps a close eye on them for any suspicious activity.
FAQ
Who can be an RCA?
Relatives and Close Associates include all individuals who can influence or benefit from the actions of a PEP or otherwise high risk customer; such as family members, close friends, or business partners.
Why are RCAs important in anti-money laundering (AML) practices?
RCAs are important because they help identify potential risks linked to high-profile individuals. For example, whether a PEP is using their partner’s account in order to launder money without raising any red flags themselves.
How can financial institutions screen for RCAs?
Financial institutions can use a combination of public databases, internal reports, and third-party KYC lists to screen for RCAs.
