What are KYC/AML procedures, what are they for and how can they protect the interests of both the investor and the broker.
In the modern world, many people are completely calm about security control at airports or shopping malls, but worries about requesting data for identity verification or sources of earned funds when opening a brokerage account remain. This problem has become especially urgent now, with a surge in brokerage tourism and active onboarding of Russians to foreign investment companies. What are KYC/AML procedures, why they are needed and how they can protect the interests of both the investor and the broker, we will tell below.

What is KYC Compliance and who needs it kycaid.com
On guard of the law.
Compliance — from the English compliance, which means "consent, compliance, acceptance". This word refers to compliance with internal and external requirements or norms. In fact, this is part of the management/control system in the organization related to compliance risks, that is, possible violation of the requirements of legislation, legal documents, rules and standards of regulators, industry associations, codes of conduct in the company, and so on.
There are two main types of compliance procedures:
• KYC (Know Your Customer, or "know your customer");
• AML (Anti-Money Laundering, or "Anti-money Laundering").
Who is your client?
What is the first abbreviation about? That all financial companies, including brokerage companies, must identify and verify the identity of each client even when onboarding. Once it was an internal practice of organizations, but now, especially in the light of anti-Russian restrictions, it has become a must do for every self-respecting investment company. This is necessary in order, for example, not to accept a person who is on an individual SDN list for service. Such a mistake can cost a business dearly, and in order to protect themselves and their clients from secondary sanctions, brokers need to conduct thorough scoring checks daily, since the situation is dynamic and can change at any moment.
Verifications of different levels are possible, but each person must provide a certain list of information. So, Russians who would like to open an account with a foreign (for example, Kazakh) broker need to provide the following data: full name, date of birth, phone number, email, ID (passport), as well as IIN (not to be confused with the Russian TIN!).
Where does the money come from?
Now let's deal with AML. Back in 1989, the Intergovernmental Commission on Financial Monitoring (FATF) was established (Financial Action Task Force on Money Laundering — FATF). After that, the concept of AML officially entered international usage. What does this mean in the case of checking the sources of income for potential clients of brokers? When depositing funds to an investment company that values its reputation, you may be asked to document that they were received legally (earned, inherited, etc.).