KYC file + EDD review playbook — risk-rating logic, BOI / UBO verification, source-of-wealth vs source-of-funds, EDD trigger conditions, file completeness checklist, sign-off chain. Reach for this skill when reviewing a single customer file, designing the firm's KYC standard, or training analysts. Used by `aml-kyc-analyst` (primary).
Instrucciones de origen · Vista previa de solo lectura
name
kyc-edd-review
description
KYC file + EDD review playbook — risk-rating logic, BOI / UBO verification, source-of-wealth vs source-of-funds, EDD trigger conditions, file completeness checklist, sign-off chain. Reach for this skill when reviewing a single customer file, designing the firm's KYC standard, or training analysts. Used by `aml-kyc-analyst` (primary).
Skill: kyc-edd-review
Purpose: Review an individual KYC file (or a sample of files) against the firm's standard and the regulator's expectations. Same playbook used in reverse to design the standard, or to train new analysts on what "good" looks like. Used by aml-kyc-analyst (primary).
When to use
Reviewing a single customer file before onboarding sign-off
Sampling for periodic QC / second-line monitoring
Designing or refreshing the firm's KYC standard
Building EDD trigger logic for a new product / channel / geography
Training analysts — this is the canonical "what good looks like"
Pre-exam KYC-file sample preparation
Frameworks in scope (cite the right one)
FATF Recommendation 10 (Customer Due Diligence) and Recommendation 12 (PEPs) — the global baseline.
US: BSA / FFIEC BSA-AML Examination Manual — "Customer Identification Program" (CIP) and "Customer Due Diligence" sections; FinCEN CDD Rule (31 CFR §1010.230) for beneficial-ownership requirements.
EU: 4AMLD / 5AMLD / 6AMLD — implemented locally; check the transposing national rule.
UK: MLR 2017 (as amended) — regulations 27–35.
Pick the citation that governs the customer's relationship with the firm, not the one most convenient. House opinion #1: section + subsection + paragraph.
Risk-rating logic — the five dimensions
Every customer gets an inherent risk rating at onboarding and at refresh. The dimensions:
Dimension
What you assess
Examples of higher risk
Customer type
Natural person / legal entity / trust / fund / nominee / PEP
PEP, complex trust, nominee director arrangement
Geography
Domicile, citizenship, business activity location, source-of-funds origin
The output is a tier: Low / Medium / High (some firms use 4-tier; map). The tier drives both EDD trigger and refresh cadence (see below). Document the weighting of dimensions in the firm's KYC standard so analysts don't reinvent it per file.
CDD vs EDD — the trigger conditions
Standard CDD applies to every customer. EDD is triggered (and must be documented as such) when any of the following is present:
High-risk rating from the five-dimension matrix above
PEP — domestic, foreign, or international-organization, including close associates and family members (FATF Rec. 12)
High-risk geography — FATF-listed (call-for-action or under-monitoring), or sanctions-adjacent jurisdictions
Adverse media or negative sanctions screening secondary match that didn't escalate to true-hit
Reliance on a third party for CDD components (introducer banks, regulated intermediaries)
Trigger event during the relationship — material change in activity, change of beneficial ownership, new red flag
EDD is not "CDD with more pages." EDD adds new content: senior-management approval (named, dated), enhanced source-of-wealth (not just source-of-funds), enhanced ongoing monitoring with documented frequency, and richer adverse-media / open-source review with primary-source citations.
BOI / UBO verification — the most-fudged step
Beneficial ownership identification (BOI) / ultimate beneficial owner (UBO) verification is where most KYC files quietly fail.
Threshold: the FATF baseline is 25% ownership or control (FATF Rec. 10 + 24). Some regimes (e.g., 5AMLD post-amendment, certain sectoral rules) push it lower for higher-risk situations. Always confirm the applicable threshold in writing.
Acceptable verification methods, in order of strength:
Corporate registry extract from an authoritative public source (Companies House, BMA registers, equivalents) — dated within an acceptable window (typically 3 months).
Notarized / apostilled ownership certificate from the corporate secretary or registered agent.
Audited financial statements showing the ownership structure on a related-party note.
Beneficial-ownership register filing from the entity's jurisdiction (where one exists — UK PSC, Bermuda's central register for designated entities, etc.).
Customer attestation of UBO — acceptable only as a supporting document, never as the sole source for higher-risk customers. A signed UBO attestation alone is not BOI verification.
Independent investigation — corporate-research vendor reports, public-records aggregators — used as cross-check, not primary source.
The chain must terminate in natural persons. A UBO of "ABC Holdings Limited" is not a UBO. Trace until you reach humans or document why you can't (publicly listed parent above a certain threshold, regulated fund with disclosed structure, etc. — and even then, document the stop-condition).
Sanctions-screen the beneficial owners individually — not just the legal entity. This is a common audit finding (see also sanctions-hit-disposition).
Source of wealth vs source of funds — the most-confused topic
These are different. The standard analyst confusion: they collect "source of funds" and treat the file as complete.
Source of funds (SoF)
Source of wealth (SoW)
Question answered
Where did this specific transaction / deposit come from?
How did the customer accumulate their overall wealth?
Time horizon
Immediate (this wire, this deposit)
Lifetime / multi-decade
Evidence
Bank statement, contract, settlement statement, sale agreement
Career history, business sale documentation, inheritance documents, investment-return history
When required
Always (CDD)
EDD / higher-risk customers, PEPs
Failure mode
"Salary" with no employer evidence
"Family wealth" with no documentation of how the family acquired it
For PEPs and high-risk customers, SoW must be plausible relative to the customer's profile and activity. A 28-year-old PEP with $50M in cumulative deposits whose declared SoW is "salary" fails on plausibility before evidence is even considered.
Periodic refresh cadence by risk tier
The refresh cadence should be in the firm's KYC standard, documented, and enforced (not aspirational). Typical:
Tier
Refresh cadence
Trigger-event refresh?
Low
Every 3 years
Yes, on any material change
Medium
Every 2 years
Yes
High / PEP
Every year
Yes, plus enhanced ongoing monitoring throughout
Trigger events that force refresh regardless of cadence: change of beneficial ownership, change of activity pattern (TM alerts), adverse media, sanctions list update affecting the customer, regulator request, related-party SAR.
File completeness checklist
For every file, all present + dated + signed:
Customer identification documents (government-issued ID, certified where required)
Proof of address (within acceptable age — typically 3 months)
Entity organizational documents (where applicable): certificate of incorporation, memorandum & articles, certificate of good standing
BOI / UBO documentation per the chain above, terminating in natural persons
Sanctions screening — customer + every UBO + relevant counterparties — with list version date and cleared / escalated disposition for every hit
PEP screening — customer + immediate family + close associates
Adverse-media screening with documented rationale on hits
Source-of-funds documentation
Source-of-wealth documentation (for EDD / PEP / high-risk)
