AML & KYC Documents for Trade Finance
The FATF-aligned KYC pack banks expect for LC and guarantee applicants - what each document proves, how long each is valid, and how to prepare a reusable file.
Every LC application starts with a KYC pack. Banks that skimp on trade-finance due diligence get large FATF-driven fines - so the pack is non-negotiable and getting bigger each cycle. This guide is the checklist of what to prepare, what each document proves, and how to build a pack that can be reused across multiple LC applications without re-collecting.
The core KYC pack
- Certificate of incorporation - proves legal existence. Get an apostilled copy for cross-border banks.
- Memorandum & Articles of Association - establishes the entity's powers and internal governance.
- Board resolution - authorising the specific transaction (LC application) and naming signatories.
- Certificate of good standing - dated within the last 3 to 6 months.
- Directors' list - current, with dates of appointment.
- Shareholder register with UBO identification - natural persons owning 25 percent or more, direct or indirect. Chain-of-ownership diagram if the structure involves holding companies or trusts.
- Audited financial statements - last 2 to 3 years, most recent within 12 months.
- Recent bank statements - typically last 6 months from the operating bank.
- Signatory IDs and proof of address - for every authorised signatory and every 25%+ UBO. Passport plus utility bill or bank statement dated within 3 months is the standard.
- Business summary - what the company does, who it trades with, expected LC volumes, and countries of operation.
Trade-specific due diligence
On top of the KYC pack, the bank runs transaction-level checks against the LC itself:
- Sanctions screening - applicant, beneficiary, beneficiary bank, vessel, port and goods against OFAC, EU, UK, UN and country-specific lists.
- Dual-use / export controls - HS code checked against ECCN or EU dual-use lists; end-user certificate required for many items.
- Price anomaly - invoice unit price checked against a market benchmark to detect over/under-invoicing.
- Voyage plausibility - does the vessel actually visit the named load port and discharge port on the stated dates? Ship-tracking data catches ghost routes.
How to keep the pack reusable
- Maintain a controlled folder with a version log - every document dated, superseded copies archived.
- Refresh certificate of incorporation, directors' list and good-standing certificate every 12 months.
- Publish audited financials as PDF within 90 days of year end - avoid last-minute drafts.
- Hold a signed UBO declaration on file that lists every 25%+ owner. Re-sign after any share transfer.
- Track signatory ID expiry dates and refresh 60 days ahead.
A repeat LC applicant with a maintained pack can typically submit an LC application in 3 to 5 working days. A first-time applicant assembling the pack from scratch typically needs 2 to 3 weeks - and the bank cannot start scoring risk until the pack is complete.
Screen every transaction
Use the Sanctions Screening tool to check names, vessels and ports against the current OFAC, EU and UK lists before submitting an LC application. The Sanctions Guide walks through the current control regimes by country.
Frequently asked questions
What KYC documents does a bank need for an LC applicant?#
The core pack: certificate of incorporation, memorandum and articles, board resolution authorising the transaction, list of directors and shareholders (with UBO 25 percent threshold identification), audited financials for the last 2-3 years, most recent bank statements, and IDs plus proof of address for authorised signatories and UBOs. Regulated banks also want a business summary, expected trade volumes, and country-of-operations disclosure.
Who is an ultimate beneficial owner (UBO)?#
Any natural person who ultimately owns or controls 25 percent or more of the applicant, directly or through layers of ownership. FATF and most local regulators require identification and verification of every UBO above the 25 percent threshold - and of the senior managing officer if no UBO meets the threshold. Ownership chains through trusts or nominee shareholders must be unwound to the natural persons behind them.
How often does KYC need to be refreshed?#
Most banks operate a risk-based refresh cycle: low-risk clients every 3 years, medium-risk every 2 years, high-risk (including cash-intensive businesses, PEP relationships, and sanctioned-country exposure) annually. Trigger events (change of ownership, new sanctions listing on a counterparty, unusual transaction pattern) force an out-of-cycle refresh regardless.
What is trade-specific due diligence?#
On top of standard KYC, banks screen the trade itself: sanctions on parties, vessels, ports and goods; dual-use and export-control checks on the HS code; price-anomaly checks against a market benchmark for the commodity; and voyage-plausibility checks (does the vessel actually visit that port?). Wolfsberg's Trade Finance Principles set out the expected framework.
How do I prepare a reusable KYC pack?#
Assemble the core documents once in a controlled folder with dated versions. Refresh certificates of incorporation and directors' lists every 12 months. Get financials audited annually and packaged as PDF within 90 days of year-end. Maintain a signed UBO declaration on file that lists every 25%+ owner and gets re-signed after any share transfer. This pack cuts LC application time from 2-3 weeks to under 5 days on repeat submissions.