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tegwick 0741a2e3a5 Deepen beneficial ownership and registry identifier research; resolve canon questions

Add source notes on FinCEN CDD/BOI beneficial ownership and ISO 6523/ALEI
registry identifier subtypes. Resolve OpenQuestions: Beneficial Ownership
Relationship as dedicated type; Registry Identifier and Proxy Commercial
Identifier as Reference layer specializations. Update glossary, conceptual
model, terminology, downstream recommendations, and corpus index.

2026-06-21 21:45:02 +02:00

4.9 KiB

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KYC AML and Commercial Identity Binding

Source Type

Regulatory framework synthesis. USA PATRIOT Act CIP, FinCEN KYC/AML, FATF digital identity guidance.

Domain

Financial regulation, customer identification, beneficial ownership, and ongoing commercial relationship monitoring.

Why This Source Matters

KYC/AML is where governments mandate commercial identity binding: institutions must verify who they transact with, retain evidence, and monitor behavior. This is the strongest practical force turning fluid identities into regulated, high-stakes counterparty records.

Key Concepts

KYC (Know Your Customer): policies ensuring institutions know customers and risks.
AML (Anti-Money Laundering): broader program preventing illicit finance.
CIP (Customer Identification Program): US mandate to verify identity before account opening.
CDD (Customer Due Diligence): risk assessment of customer relationship.
EDD (Enhanced Due Diligence): heightened review for high-risk customers.
Beneficial owner (BO): natural persons owning/controlling legal entity customers (historically 25% threshold; may be lowered for high risk).
Ongoing monitoring: transaction surveillance after onboarding.
Record retention: CIP records kept years after relationship ends.
Sanctions / PEP screening: compare identities against government lists.
Digital identity (FATF): guidance on digital ID assurance for KYC.

Relevant Terminology

Term	Source meaning
KYC	Know-your-customer compliance program.
CIP	Customer identification at onboarding.
Beneficial owner	Natural person behind legal entity customer.
PEP	Politically exposed person (elevated risk).
Due diligence	Risk-based identity and activity review.
Ongoing monitoring	Continued scrutiny of customer activity.
Risk profile	Customer risk classification.
FinCEN	US Financial Crimes Enforcement Network.

Modeling Assumptions

Commercial relationship triggers identity rigor proportional to risk.
Legal entity customers require beneficial owner identification — natural persons bound to organization customers.
Identity verification is not one-time; monitoring continues across lifecycle.
Evidence must be retained even after account closure.
False identity has regulatory and criminal consequences — binding is external, not user preference.
Friction is accepted where commercial stakes require it.

Identity-Canon Implications

KYC onboarding creates Commercial Record + Commercial Commitment (regulated relationship) bound to Natural Person and/or Organization/Legal Entity.
Beneficial owner maps to Natural Person linked via Beneficial Ownership Relationship to Organization/Legal Entity customer (see beneficial-ownership-kyc-boi.md).
CIP evidence maps to Evidence Source with Assurance Level.
Ongoing monitoring produces Evidence Source events affecting Lifecycle State and Trust Relationship.
Supports fluid-to-bound transition: anonymous lead → verified customer with retained proof.
Account (bank/login) is insufficient alone; KYC binds the counterparty.

Terminology Conflicts

Customer (KYC) vs. Customer (Stripe) vs. Customer (role): regulated counterparty vs. billing object vs. commercial role.
CIP customer vs. Account holder: verified party vs. access credential.
Digital identity vs. login identity: assurance-ranked ID vs. session user.

Candidate Canonical Mappings

KYC/AML concept	Candidate canonical concept
Verified customer	Commercial Record + Actor binding
CIP evidence	Evidence Source
Beneficial owner	Natural Person + Beneficial Ownership Relationship
Risk profile	Assurance Level + metadata on Commercial Relationship
EDD review	Evidence Source (enhanced)
Sanctions hit	Lifecycle State / Trust Relationship revocation
Transaction alert	Evidence Source event
Record retention	Lifecycle/archival policy on Commercial Record

Open Questions

Standard control_basis enum across US CDD and EU AMLD wording.
How to model BOI registry volatility in lifecycle without canon becoming legal advice?

Resolved (see beneficial-ownership-kyc-boi.md)

Beneficial Owner → Beneficial Ownership Relationship (dedicated type, not Ownership subtype).

References

Thomson Reuters, Customer Identification Program overview — https://legal.thomsonreuters.com/blog/overview-customer-identification-program-cip/
Okta KYC definition — https://www.okta.com/identity-101/kyc/
FinCEN, USA PATRIOT Act Section 326 — https://www.fincen.gov/resources/statutes-regulations/usa-patriot-act
FATF Guidance on Digital Identity — https://www.fatf-gafi.org/en/publications/Fatfrecommendations/Guidance-on-Digital-Identity.html

4.9 KiB Raw Blame History