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How To Perform Customer Due Diligence / KYC On A Trust? What Are The Main Risks From Money Laundering Perspective?

By Sikander Hayat  Before we start to have a look at the KYC requirements for a Trust, we need to understand some basics about this entity type. 1.       What kind of legal entity is a Trust 2.       How many kinds of common Trusts structures are there 3.       Who normally use Trust entities and 4.       From Money Laundering point of view, what are the major risks From money laundering point of view, Trusts can be a very tricky type of entity as it can be structured in such a way to avoid detection of real beneficiaries . Trusts can also be used as avehicle for tax evasion . Trusts can be set up in jurisdictions which are very opaque and make it difficult for any law enforcement agencies or counterparties to be sure of who is actually behind the trust.  We also need to watch out for situations where: 1.       The client establishes a trust when there seems to be little reason to do so 2.       The trust is established in a jurisdictionwhich has