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Understanding the Steps of a “Know Your Customer” Process

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To help battle against the multi-trillion-dollar financial crime industry, firms themselves take steps toward solving the problem. One way organizations have responded is by expanding their “Know Your Customer” (KYC) efforts.

KYC references a set of guidelines that financial institutions and businesses follow to verify the identity, suitability, and risks of a current or potential customer. The goal is to identify suspicious behavior such as money laundering and financial terrorism before it ever materializes.

KYC regulations originated from years of unchecked financial crimes. The initial guidelines were drafted in 1970 when the U.S. passed the Bank Secrecy Act (BSA) to prevent money laundering. Notable additions came years later, after the Sept. 11, 2001 terrorist attacks and 2008 global financial crisis.

The regulations put in place over the years have required firms to monitor client behavior regularly. And there is no exception for not complying. Any company—including banks, insurance companies, and creditors—with exposure to client risk must develop a KYC strategy for engaging with customers.

What are the requirements to “Know Your Customer”?

The “Know Your Customer” framework contains three steps: customer identification program (CIP), customer due diligence (CDD) and enhanced due diligence (EDD).

Customer Identification Program

At the minimum, firms must pull four pieces of identifying information about a client, including name, date of birth, address, and identification number.

Most firms take additional steps in their screening process. Many will make sure that clients do not appear on government sanction lists, politically exposed person (PEP) lists, or known terrorism lists— those who do appear usually require enhanced due diligence.

Other items considered at this time include financial transactions, which firms use to separate potentially risky behavior from regular business activity.

Much of this information comes from various reporting agencies, public databases and third-party sources.

Customer Due Diligence (CDD)

Customer due diligence is the process of classifying all the information collected during the Customer Identification Program.

Firms examine the nature and beneficiaries of existing relationships to ensure all activity is consistent with historical customer information.

The goal is to obtain enough information to verify a customer’s identity and assess their riskiness. Since financial crime happens quickly, firms frequently monitor this information for unusual spikes in activity or changes to sanction lists. Most clients pose little to no risk, but the few who do are subject to enhanced due diligence.

Enhanced Due Diligence (EDD)

If a customer is believed to pose additional risks, firms take extra steps to gain a better understanding of their motivations. A high-risk person may include those with political exposure or relationships with designated persons. Even someone in a high-risk country can raise a red flag for compliance.

In practice, firms must demonstrate a deeper understanding of the high-risk clients identified by a standard customer due diligence program. Some of the information required to perform enhanced due diligence includes a source of wealth verification, detailed management reports and relevant third-party research.

Jerry Kerns is an admin and content writer with 10 years of experience in the industry. He has a passion for crafting compelling and informative pieces that engage readers. Jerry has a strong background in specific areas of expertise such as SEO, social media, email marketing, etc., and has a track record of producing high-quality content for a variety of platforms and audiences. In addition to writing, Jerry also enjoys reading articles and books.

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Sell In May? This VIX Butterfly Spread Could Be The Perfect Trading Strategy

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Market volatility has fallen markedly as measured by the CBOE Volatility (VIX) Index. VIX is a real-time index that represents the market expectation for near-term volatility in the S&P500 index.

Investors and traders have long used VIX as a measure of the level of risk, fear or stress in the market.

Today, we’re going to look at a long call butterfly using VIX options as a way to profit if volatility jumps up again in the next few weeks.

A long call butterfly is constructed through buying a call option, selling two higher calls and buying one call even higher.

The trade is entered for a net debit meaning the trader pays to enter the trade. This debit is also the maximum possible loss.

Usually, a butterfly is placed roughly at-the-money, but today we are looking at placing it out-of-the-money.

Using the May 16 expiry, the trade would involve buying the 20 strike call, selling two of the 25 strike calls and buying one of the 30 strike calls.

The cost for the trade would be around $40-45 which is the most the trade could lose. The maximum potential gain is $460, which would occur is VIX closed right at 25 at expiration. The lower breakeven price is 20.50 and the upper breakeven price is 29.50.

There are three general outcomes with this butterfly.

  • VIX below 20.50 – Trade loses $45. This scenario should be reasonably acceptable for most investors. While the option trade suffers a full loss, hopefully stocks have been stable or rising.
  • VIX between 20.50 and 29.50 – Good for the VIX butterfly, but potentially bad for stock portfolios.
  • VIX above 29.50 – Full loss on the VIX trade and potentially big drops in stock portfolio.

So, VIX above 30 is the main scenario that hurts in this case, but how likely is that? We’ve only seen a VIX reading of above 30 on a handful of days in the last six months.

Using VIX options can be simple and cheap way to buy some protection against a mild selloff in stocks between now and mid-May. The trade can be placed relatively cheaply at $40-45 per contract.

VIX options behave differently to regular stock options, so it is important that any trader using this product fully understands the risks involved. As always, do your own research and due diligence before risking any of your hard-earned capital.

Please remember that options are risky, and investors can lose 100% of their investment. This article is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.

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Core Lithium (ASX:CXO) bolsters Finniss mineral resource by 62pc

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  • Core Lithium (CXO) posts a 62 per cent increase to the total mineral resource estimate (MRE) of its Finniss lithium project in the Northern Territory
  • The total resource now comprises 30.6 million tonnes at 1.31 per cent lithium, with measured and indicated resources of 19.4 million tonnes at 1.37 per cent lithium
  • Core says the results highlight the “significant potential” for mine life extensions at Finniss, and it will now work to complete an updated ore reserve estimate
  • The company has allocated $25 million to its 2023 drilling campaign — nearly double its 2022 budget — to deliver further resource increases
  • CXO shares are up 7.03 per cent and trading at 99 cents at 11:54 am AEST

Core Lithium (CXO) has posted a 62 per cent increase to the total mineral resource estimate (MRE) of its Finniss lithium project in the Northern Territory.

The total resource now comprises 30.6 million tonnes at 1.31 per cent lithium oxide.

Of this, the measured and indicated mineral resources make up 19.4 million tonnes at 1.37 per cent lithium oxide — an increase of 46 per cent from the previous resource.

The update follows the company’s largest drilling program to date: a 39,600-metre reverse circulation and diamond drilling campaign completed in 2022.

The program was conducted at both known deposits and new prospects within the Bynoe pegmatite field, which lies 15 kilometres south of Darwin and extends up to 70 kilometres in length and 15 kilometres in width.

Core said the new results highlighted the “significant potential” for mine life extensions at Finniss, and the company will now work to complete an updated ore reserve estimate.

The company has allocated $25 million to its 2023 drilling campaign — nearly double the budget allocated for 2022 — to deliver further increases to the project’s MRE.

CXO shares were up 7.03 per cent and trading at 99 cents at 11:54 am AEST.

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Stocks On the Rise: Juniper Networks, Inc. (JNPR) Spikes on Market Update

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Juniper Networks, Inc. (JNPR), a Communication Equipment business, was a active mover in the prior market session. Juniper Networks, Inc. (JNPR) stock opened the day for trading at $23.28 and closed the day at $23.68 with gains of +2.42%. The increase movement in Juniper Networks, Inc. (JNPR) beat the movement in the S&P 500 for the day which gained +1.69% in prior market day.

Juniper Networks, Inc. (JNPR) is focused on the Communication Equipment sector. This stock market sector has seen some movement from investors in recent market sessions. Bullish investors of Juniper Networks, Inc. (JNPR) will be looking for positive upcoming earnings whereas bearish investors of Juniper Networks, Inc. (JNPR) will be looking for negative earnings. The last time Juniper Networks, Inc. (JNPR) had an earnings surprise was on Qtr Ending 03/20 when they reported $0.11 compared to an estimate of $0.12 which was a difference of -$0.01 resulting in a change of -8.33%. Current earnings estimates are to be released for Current Qtr 06/2020 on Juniper Networks, Inc. (JNPR) and out of 5 Wall Street estimates the average is saying $0.24. The high estimate is saying $0.26 whereas the low estimate is saying $0.21 and the prior year Juniper Networks, Inc. (JNPR) announced earnings at $0.27 a growth rate est. (year over year) of -11.11%.

The market performance of Juniper Networks, Inc. (JNPR) has varied recently. Year to date Juniper Networks, Inc. (JNPR)’s shares are down -3.86%. Over the past 12 weeks Juniper Networks, Inc. (JNPR) is down -5.05% and over the last 4 weeks Juniper Networks, Inc. (JNPR) is up 9.28%. Juniper Networks, Inc. (JNPR) current income statement shows revenue (ttm) of $4.44B. Gross Profit is $2.62B. This puts the current EBITDA of Juniper Networks, Inc. (JNPR) at $708.4M.

Wall street investors might also notice recent changes to stock analyst estimates for Juniper Networks, Inc. (JNPR). The stock is trading with an RSI (relative strength index) of 60.55 indicating Juniper Networks, Inc. (JNPR) is neither overbought nor oversold. Technically, JNPR’s short term support levels are around $1367.66, $1334.96 and $1286.57 on the downside. JNPRs short term resistance levels are $1526.69, $1493.59 and $1432.99 on the upside. The market cap of Juniper Networks, Inc. (JNPR) is $7.846B and institutions hold 96.01% of the stock. The outstanding share count stands at 330.80M while the short float (shares short) stands at 3.53%.

Research indicates that these earning estimate changes look to be directly correlated with short-term stock prices. The investors can look to capitalize on the basis of ranking. Based on technical analysis, JNPR has short term rating of Bullish (0.25), Intermediate rating of Neutral (0.23) and the long-term rating of Bullish (0.39) giving it an overall rating of Bullish (0.29).

The EPS growth this year on Juniper Networks, Inc. (JNPR) is decreased -38.40% and is expected to increase 16.15% next year. However, quarterly earnings (EPS) growth year over year on Juniper Networks, Inc. (JNPR) has decreased by -31.00% and quarterly revenue (Sales) growth year over year stands at -0.40%. Gross margin is detected at 58.80% that represents the percent of total sales revenue that the company retains after direct cost of goods sold. Net profit margin (ttm) is 7.50% while return on equity (ttm) is 7.30%.

Recent Developments:

2020-04-28 – Juniper Networks Q1 Adj EPS $0.23.
2020-04-08 – Finjan Holdings Says PTAB Issued Final Written Decision Finding Finjan’s U.S. Patent No. 6,154,844 Patentable Over Prior Art.
2020-01-27 – Juniper Networks Reports Q4 Non-GAAP Earnings Per Share $0.58.
2019-12-03 – Rostelecom Partners with Juniper Networks, Inc. to Build IP Transport Backbone for Next-Generation Services.
2019-12-03 – CERN Selects Juniper Networks to Increase Network Capacity for Handling Unprecedented Volumes of Data for its Scientific Projects and Everyday Tasks.

About Company:

Based in Sunnyvale, CA, Juniper Networks, Inc. is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help to build network infrastructure used for services and applications based on single Internet protocol network worldwide.

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