In this post-financial crisis environment, financial institutions have become stricter regarding financial transparency by requiring KYC documents for persons they are conducting business with. KYC stands for Know Your Customer. It is basically a vetting process conducted by a business or bank to verify the identity of a customer, usually to prevent money laundering, terrorist financing or financial fraud. If you are receiving finance for an aircraft or buying your aircraft from a bank, you will more than likely be asked to provide KYC documents. Some escrow agents and law firms will also require running a KYC check on customers. We have also had situations in the past where a financial institution holding the loan on an aircraft would not accept money without having run a KYC check on the buyer to confirm the source of funds before using them to clear the loan. KYC is an extra compliance step to be aware of and prepared to submit if you are asked. But not all transactions require KYC checks. In a buyer to buyer transaction, KYC rarely gets brought up. Many customers do not wish to turn over certain documents required for KYC and if you are that person, know that conducting an aircraft transaction with a financial institution may not be the right avenue for you.
Different organizations ask for different documents, but KYC documents typically include a copy of your passport, utility bill with your name and address, certificate of incorporation for your company, articles of incorporation and the shareholder structure. In this time of sanctions lists and a greater push for financial transparency, financial institutions are doing their best to know exactly where money is coming from and KYC is a method they are using to try and accomplish this.
Blogs are written from real world experience by Colibri Aircraft’s individuals. If you have any questions or comments about the topic of this blog, please feel free to contact us at enquiries@colibriaircraft.com