Know your customer

FMO runs the risk of becoming involved in money laundering, financing terrorism and financing sanctioned entities or customers with a bad reputation. To mitigate such risks, we follow policies and procedures that deter criminal activity and ensure we do business with reputable customers. We evaluate our policies and procedures on an ongoing basis, enabling the investment departments to conduct in-depth customer due diligence in line with evolving applicable laws and regulations. 

FMO plays an important role as gatekeeper to help prevent financial economic crime (FEC) and preserve the integrity and reputation of the financial system. We only want to deal with customers of good standing. Therefore, we obtain and monitor information and documents concerning the identity of a customer, gain insight into the business and its structure and assess customer integrity risk holistically. Referred to as Know Your Customer (KYC), this is an integral part of the investment process and the customer relationship throughout its lifecycle. We work in countries where, at times, it is hard to obtain and verify documentation and information. Nevertheless, FMO has a robust FEC framework in place, which complies with national and international FEC and KYC standards.

In 2023, we increased the number of employees involved in KYC in both the first and second lines. In the first line, a specialized KYC Department supports and works closely with the investment teams that have customer contact and are responsible for the comprehensive risk assessment of the customer. The Compliance department, forming the second line, maintains compliance oversight and provides mandatory advice in case of high-risk customers and other situations.

New employees receive training on the prevention of FEC, as well as other integrity awareness training during their first weeks at FMO and yearly Integrity refresher trainings are mandatory for all employees. In 2023, we continued to provide additional mandatory training including on bribery and corruption and combating terrorism financing. A monthly KYC learning track shares knowledge and maintains awareness regarding the specific risks in FMO’s markets.

In 2022, we conducted an integrity risk assessment on our equity fund investments following DNB's recommendation and executed an action plan to address the risks identified. In 2023, we improved our due diligence practices for new fund investments, increased risk awareness and deepened our understanding of implementing KYC policies by fund managers. In 2024, we will implement our enhanced due diligence standards in our existing fund portfolio in a risk-based manner and further support our customers in improving their KYC practices. This will mitigate our risks and expand our role as gatekeeper.