1. What does the KYC process consist of?
The KYC process involves verifying the identity of clients, their representatives, and beneficial owners. Its purpose is to prevent the commission of money laundering and terrorism financing crimes.
2. What legislation and recommendations does Banco Português de Fomento, S.A. follow in the KYC process?
The KYC process is based on the duties that Banco Português de Fomento (BPF) is subject to, under Law no. 83/2017 of August 18 and the Notice of Banco de Portugal no. 1/2022, specifically the duty of identification and diligence.
In the KYC process, BPF also aims to ensure compliance with the provisions of Law no. 89/2017, which defines the Legal Regime of the Central Register of Beneficial Ownership, and Law no. 97/2017, which regulates the application and execution of restrictive measures approved by the United Nations or the European Union.
BPF follows the recommendations issued by supranational entities, such as the Financial Action Task Force (FATF/GAFI) and the European Banking Authority (EBA).
3. Why does BPF implement a KYC process?
As a Financial Institution supervised by Banco de Portugal, BPF is considered an obligated entity under Law no. 83/2017 of August 18. In this capacity, BPF is required to adopt identification and diligence measures to know its clients. Law no. 83/2017, Article 24, defines a set of identifying elements that BPF, as an obligated entity, must collect.
4. What are supplementary diligence procedures?
In addition to the identification procedures, BPF is also required to:
- Obtain information about the purpose and intended nature of the business relationship.
- Obtain information about the origin and destination of the funds moved within the business relationship or during occasional transactions.
- Maintain ongoing monitoring of the business relationship.
5. What is the concept of "beneficial owner"?
Beneficial owners of corporate entities are defined as:
- Individuals who, ultimately, own or control directly or indirectly a sufficient percentage of shares, voting rights, or capital in the entity.
- Individuals who exert control over the entity by other means.
- Individuals who hold senior management positions if, after exhausting all possible means, no individual is identified, or there are doubts about whether identified individuals are the beneficial owners.
For entities, BPF considers:
- Direct ownership as holding more than 25% of the share capital or voting rights.
- Indirect ownership as having more than 25% of the share capital through an entity controlled by one or more individuals.
6. What does the application of enhanced measures entail?
In certain cases, BPF is required to apply enhanced measures in addition to standard identification and diligence procedures, particularly in situations such as:
Establishing business relationships or conducting occasional transactions with high-risk third countries.
- When the client or representative is not physically present.
- Dealing with politically exposed persons (PEPs).
- Other factors indicating higher risk.
Enhanced measures may include:
- Additional information about clients, representatives, or beneficial owners.
- Further verification of information.
- Higher-level approval for business relationships or transactions.
- Increased depth or frequency of monitoring the business relationship.
- Shortening the update interval for collected information.
7. Why is there a need to apply enhanced diligence measures in these situations?
According to Article 36 of Law no. 83/2017, enhanced diligence measures must be applied when there is a factor indicating a potentially higher risk. Annex III of the law provides a non-exhaustive list of such factors.
8. What are high-risk third countries?
High-risk third countries include:
- Countries identified by credible sources (e.g., FATF) as lacking effective systems for combating money laundering and terrorism financing.
- Countries with high levels of corruption or criminal activity, according to Transparency International’s Corruption Perceptions Index.
- Countries offering preferential tax regimes.
- Countries subject to sanctions or other restrictions imposed by the UN or EU.
- Countries supporting terrorism or harbouring terrorist organisations.
9. Is completing the KYC form for Banco Português de Fomento, S.A. mandatory?
Yes, completing the full KYC form is mandatory to ensure compliance with the provisions of Law no. 83/2017, dated 18 August.
Why does BPF request the identification of holders of shareholdings and voting rights equal to or greater than 5%?
BPF requests the identification of holders of shareholdings and voting rights equal to or greater than 5% to comply with the provisions of Article 24, paragraph 1, sub-paragraph b), sub-sub-paragraph v) of Law no. 83/2017, dated 18 August.
11. Why does BPF request the identification of members of the board of directors or equivalent bodies, as well as other senior management with executive powers?
BPF requests the identification of members of the board of directors or equivalent bodies to comply with the provisions of Article 24, paragraph 1, sub-paragraph b), sub-sub-paragraph vi) of Law no. 83/2017, dated 18 August.
12. What types of evidence can be provided to demonstrate the origin of funds?
Clients (companies) can prove the origin of funds through Financial Statements; Profit and Loss Statements; Proof of Contributions; and Loan Statements.
For clients (companies) that are vehicles for holding personal assets (Special Purpose Vehicles), the proof of origin of funds for their ultimate beneficial owners may be provided through IRS Declarations; Pay Slips; Proof of Inheritance (e.g., heir certification); Proof of Capital Gains; Proof of Loans or Proof of Income from Capital.
This is a non-exhaustive list, and the assessment of these elements depends on the specific circumstances of the case. The documents provided by the client must cover the amount to be contributed to the transaction. In certain cases, multiple types of documents may be required. The evidence should demonstrate that the ownership of the funds belongs to the entity under review.
13. What types of documents can be provided as proof of permanent residence?
The following documents can be provided as proof of permanent residence:
- Utility bills (electricity, water, gas, or telecommunications) issued in the last 3 months;
- Rent receipts issued in the last 3 months;
- Certificate from the Parish Council (issued in the last 3 months);
- Certificate issued by the Tax Authority (issued in the last 3 months);
- Property Tax (IMI) payment notice for permanent residence (issued in the last fiscal year).
14. When the permanent residence address is the same as the fiscal address, is it sufficient to provide the proof of fiscal residence to verify both situations?
Yes, only one document is required if the full address of the permanent residence matches the fiscal address.
15. What is the Central Register of Ultimate Beneficial Owners (RCBE)?
The Central Register of Ultimate Beneficial Owners (RCBE) is a platform managed by the Institute of Registries and Notaries where individuals who, directly or indirectly, own or control legal entities are identified. The RCBE was created by Law no. 89/2017, dated 21 August.
16. Must the ultimate beneficial owners identified in the BPF KYC form match the information provided in the RCBE?
Yes, whenever the client, under Law no. 89/2017, dated 21 August, is required to register its ultimate beneficial owners in the national RCBE platform.
If inaccuracies or discrepancies are identified in the RCBE, and the client does not correct them, BPF is obligated to report them to the Institute of Registries and Notaries.
17. What if the client is a foreign entity?
For entities incorporated in European Union countries, proof equivalent to the RCBE registration in the country of origin must be provided.
For entities incorporated in third countries, the equivalent information in the country of origin must be reviewed depending on the specific case, to verify the status of ultimate beneficial owner.
18. Why does BPF request the submission of a dated (less than 3 months old) and signed organisational chart by management/administration?
BPF requests clients to submit an organisational chart to assess the ultimate beneficial owners of their clients and the ownership and control structure.
In this regard, the organisational chart should reflect the corporate/shareholding structure up to the ultimate beneficial owners (individuals), indicating the corresponding percentage of capital ownership and country of residence (not the departmental structure of the entity).
19. Is providing information under the KYC process compatible with the General Data Protection Regulation (GDPR)?
Yes. Under Article 58 of Law no. 83/2017, dated 18 August, BPF is authorised to process personal data necessary to comply with its legal obligations, including identification elements, financial and banking data, and information about the origin and destination of funds.
20. Are all fields in the KYC form mandatory?
Yes. All fields in the BPF KYC form are mandatory, as well as the submission of the required supporting documentation listed at the end.
21. What are the consequences of not filling out the required information or submitting the necessary supporting documentation?
Failure to provide the legally required information will result in the refusal to establish or close the business relationship, with BPF being subject to the obligation of refusal.
22. Why does BPF request periodic renewal of the KYC process?
In accordance with applicable legislation, BPF is required to maintain continuous monitoring of the business relationship and ensure the accuracy, completeness, and current status of the information and other elements collected in the identification and diligence process. The frequency of updating the information is determined by the risk profile associated with each client.
23. What happens if the client does not provide the requested information in a timely manner?
If the client fails to provide the requested information on time, restrictions may be applied to the commercial relationship.
Ultimately, if the client does not provide the requested information, the bank may proceed with closing the business relationship, under the obligation of refusal.
The speed of completing the KYC process depends on the completeness of the information submitted.
24. What are the consequences of non-compliance with identification and diligence duties?
In case of non-compliance with the duties to which it is legally subject, BPF could face fines, restrictions on its commercial activity, and reputational damage, which is why the KYC process is of great importance for the bank.