The second objective is ensuring that there is a resolution of the position of any organization whose viability is under question. This is while protecting the various interests of their customers (Stowell and Stowell, 2013). These objectives enable an organization limit its working operations to themselves and at the same time maintain a customer trust to the same organization without any comprise whatsoever (Smith and Walter, 2012).
It is the duty and responsibility of the board of directors of a private banking institution to review the procedures and policies adopted by the bank, on a regular basis (Stowell and Stowell, 2013). Any policy developed by a banking organization should address the various concerns of a customer, investment options of the banking organization, administration of trust and estates, etc (Minns, 2010). The savings association should also provide for adequate risk management and monitoring systems. This is simply because banking operations do emphasize information relating to the customer’s credit worthiness. It is necessary for the private bank to be cautious when handling the various applications of customers, regarding loans and credit (Smith and Walter, 2012).
Know Your Customer (KYC) refers to a process that a banking organization can use for purposes of verifying the identity of its customers (Smith and Walter, 2012). This process helps banking institutions to have a clear knowledge of their customer’s financial history, and make a decision on whether they are trust worthy or not (Smith and Walter, 2012). Banking organizations normally formulate a KYC policy with the intention of monitoring the transaction activities of their customers, and identification of the customers (Cottrell, 2010).
Having knowledge of the source of wealth of a customer is essentially in knowing whether the business that he or she engages in is legitimate.