What's the recommended pricing language for cost-disclosure to end-clients?
AML/CTF costs (KYC, KYB, CDD) are typically itemised on the cost agreement as an AML compliance disbursement or admin fee.
The general principle most firms are working to is: AML/CTF costs (KYC, KYB, CDD where required) are itemised on the cost agreement as an AML compliance disbursement or admin fee, in line with how the firm already treats other compliance-related disbursements.
The wording provided below is an example only and not legal advice. Each business should seek external legal advice based on their industry requirements - real estate trust accounting rules, legal cost disclosure requirements, accounting engagement letter requirements - as to what is allowed.
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KYC Scope, CDD Requirements and Cost Structure
The AML/CTF Act requires us to carry out Customer Due Diligence (CDD) before providing certain designated services to you. CDD involves verifying your identity (described as Know Your Customer or KYC and Know Your Business or KYB) and requires us to develop an understanding of your business or transaction and assess any relevant risks. This is a legal requirement and if we do not complete CDD we cannot provide designated services to you.
The law requires a risk‑based approach so the extent of CDD we must complete depends on the specific circumstances of each client and matter. CDD will be more extensive and costly for higher risk clients and those with complex ownership structures.
KYC
KYC is required to be conducted on each natural person requiring identity verification under the AML/CTF Act CDD obligations. This includes:
· Each natural person transacting in their own name; and
· Each natural person who ultimately owns or controls the entity in accordance with AML/CTF Act ultimate beneficial owner (UBO) requirements (e.g. trustees, partners, directors, secretaries, or equivalent).
Entity KYB and Ultimate Beneficial Owner identification
KYB is also required to be conducted on legal entities (such as companies, trusts, partnerships and SMSFs). This process involves:
· Verifying the existence and status of the entity; and
· Tracing ownership and control through the entity and associated entities (such as subsidiaries, holding companies, trustee companies, or nested legal entity structures) until the identity of all individuals who are UBOs are verified and any risks are assessed in accordance with AML/CTF Act.
To cover the services and costs of meeting our Customer Due Diligence obligations an administrative fee of [$VALUE] applies to each new client we onboard.
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KYC Scope, CDD Requirements and Cost Structure
The AML/CTF Act requires us to carry out Customer Due Diligence (CDD) before providing certain designated services to you. CDD involves verifying your identity (described as know your customer or KYC and know your business or KYB) and requires us to develop an understanding of your business or transaction and assess any relevant risks. This is a legal requirement and if we do not complete CDD we cannot provide designated services to you.
The law requires a risk‑based approach so the extent of CDD we must complete depends on the specific circumstances of each client and matter. CDD costs will be lower for clients who are lower risk and have simpler structures. CDD will be more extensive and costly for higher risk clients and those with complex ownership structures.
Individual KYC
KYC is required to be conducted on each natural person requiring identity verification under the AML/CTF Act CDD obligations. This includes:
· Each natural person transacting in their own name; and
· Each natural person who ultimately owns or controls the entity in accordance with AML/CTF Act ultimate beneficial owner (UBO) requirements (e.g. trustees, partners, directors, secretaries, or equivalent).
A fee of [$VALUE] applies per individual KYC check.
Entity KYB and Ultimate Beneficial Owner identification
KYB is also required to be conducted on legal entities (including companies, trusts, partnerships and SMSFs). This process involves:
· Verifying the existence and status of the entity; and
· Tracing ownership and control through the entity and associated entities (such as subsidiaries, holding companies, trustee companies, or nested legal entity structures) until the identity of all individuals who are UBOs are verified and any risks are assessed in accordance with AML/CTF Act.
A fee of [$VALUE] applies per entity KYB check: KYB on a single entity may require multiple KYB checks (and therefore KYB fees) where there are associated or subsidiary entities.