I would say that the modalities through which the reporting entities implement their know-your-customer obligations will vary based on the type of business they conduct, their size. In our regime we have 30,000 reporting entities. Some of them are the largest banks in the country, which you are well aware of, and other reporting entities are operations of a few people. Definitely the ways they structure their business to understand their clients and the purpose of their business relationship will differ.
I would argue that for the same reason, because of the variety of models, reporting entities have various levels of awareness as to their obligations to know their customers. On the one hand, I would argue that the largest financial institutions are quite sophisticated in their approach to knowing their customers. It is about when they onboard a new client—and you are right, nowadays not only may you not often go in a branch, but you may not even have to go in a branch to open an account in an institution. We have put flexibilities in the regime so that the reporting entities are able to onboard clients in what we call “non face-to-face” environments while still having measures in place to get a good understanding of who their client is, including verifying their identity, for example, and also documenting the purpose of the account if we're talking about an account opening.
Not only do reporting entities have obligations at the outset of a relationship, but throughout that relationship. That is what we call “ongoing monitoring”, and it is through that process.... Again, reporting entities have different modalities for implementing that. Large banks will have sophisticated systems in place to detect if there are strange patterns emerging that are not consistent with what they were told the account was for.
I'm giving an example. If a client says, I am opening an account to save for my grandchild's studies and then there is a large velocity of transactions happening in his or her account, a bank, through its systems, would find this quite unusual and may decide to investigate and document what is happening. At the other extreme, if we are talking about very small entities, they would have a more personal relationship with their clients and may have other means to see if there is a problem in what they think they know about their client and what is actually happening with the consumption of the services they offer.