Magister Operis · Financial Knowledgebase
Bank Compliance
Pre-compliance items in generic format: what each category is, the documents that satisfy it, and the conditions that make those documents credible.
A funding institution forms its view of a counterparty from the documents before it forms one from the transaction. Packages are read first by compliance professionals whose work is to find what is absent, and documentation that does not survive that reading never reaches a funding decision. At this level, many packages do not.
Requirements below are generic. Each applicant, their asset, and the situation surrounding both, often carry circumstances of their own that affect what is ultimately required and what affects the decisions of funding banks. Sufficiency in any transaction is determined by the receiving institution’s compliance function against the applicable asset class, jurisdiction, ownership structure, and the history (provenance) of the asset and/or funds.
First impressions are very important
The quality of documents is often assessed before the transaction itself is.
It is all too common for parties to fill out the KYC package templates that circulate the Internet with the mindset of someone filling in an application for a car loan or a house mortgage — blanks filled in, with no thought given to what actually needs to be said, or to how each document describes it competently and legally. Those templates are often assembled by parties with no background in bank compliance and no coaching from anyone who has it.
There is no shortage of parties seeking funding against their assets. A package that is correctly worded, professionally formatted and internally consistent earns the respect to be read completely and given serious consideration. One that is not leaves a bad taste quickly and is set aside, so that attention can go to the packages that were prepared properly. That assessment is made in the first minutes and is rarely revisited.
Producing KYC packages is a specialized skill. It does not matter who applies it. A principal with the skill can produce the package themselves. So can their attorney or paralegal, or anyone with a background in legal document production. Magister Operis produces them on request. What matters is that the package is well worded and professionally formatted before it is presented.
Applies to every category — accountability of parties
Every party corresponds from an address on a domain that party owns.
Principals, counsel, accountants, intermediaries, contractors, operators. A free account at Gmail, Outlook, Yahoo, AOL, an internet provider or a privacy-branded service establishes nothing about the holder, because the holder does not own the domain.
If you already have your own domain, there is nothing to do here. If you do not, Professional Email Addresses sets out why it is required and how to have one — about ten minutes and about ten dollars.
1–6 · COMMON TO ALL TRANSACTION TYPES
01Corporate Profile
Isproof the contracting entity legally exists and may contract.
DocumentsClient information sheetComplete contact details for the entity and its principals — telephone numbers included, current and answeringExecutive summary or letter of intentCorporate backgroundIncorporation certificateProfessional, corporate and tax licensesCorporate resolution authorizing the transaction
Credible whenRegistration verifiable at the issuing registryTelephone numbers and addresses are accurate and verifiableEntity name identical across all documentsSignatory authority evidenced by resolutionCorrespondence from a domain owned by the entity
Not credible whenContact details partial, out of date, redacted or omittedletterhead substituted for registration; resolution referenced but absent; free-provider email; entity name varies between documents.
02Background of Principals
Isidentification of the natural persons who own and control the entity.
DocumentsBios, CVsPassport or national IDProof of addressUBO declaration showing ownership percentages to natural persons
Credible whenStated history verifiable at the named institutionsOwnership resolves to named individuals, not to another opaque entityPrincipals reachable directly
Not credible whenroles unverifiable; ownership terminates at a nominee or trust with no beneficiaries named; principal unavailable to speak.
03Competent Legal Representation
Isidentified counsel accountable for the transaction.
DocumentsFirm name, jurisdiction, registration or bar numberEngagement letter naming the clientEvidence of professional indemnity coverFor funds transfers, attestation as to source and ownership
Credible whenFirm verifiable at its regulatorEngagement letter dated and currentCounsel experienced in international financeFirm-domain email
Not credible when"my attorney is handling it" without a firm named; no engagement letter; general practice presented as finance practice; free-provider email.
04Banking Relationships
Isthe identified institution that will receive or transmit.
DocumentsBank name, branch, jurisdictionOfficer name and direct contactAccount existence confirmation or reference letter
Credible whenRelationship exists nowBanker contactable and aware of the transactionJurisdiction acceptable to the receiving institution
Not credible whenaccount "will be opened on confirmation of funding"; no reachable officer; jurisdiction on an enhanced-diligence list without explanation.
05Background of Intermediaries
Isevery party expecting compensation, and what each one expects.
DocumentsEach intermediary namedRole in the transactionBackground of eachFee expectation of each, stated as a figure or a percentage
Credible whenEach party states its own role and expectation, rather than being spoken forA party presenting itself as direct to the principal is direct to the principalExpectations are settled before the file moves, not at closing
Not credible whenCompensation is raised for the first time once terms are agreedDirect access is claimed and cannot be demonstrated
06Attitude
Isdemonstrated responsiveness and willingness to correct.
Evidenced byReply timesDefects corrected on first requestDirect principal availabilityAbsence of manufactured deadlines
Credible whenCorrections made rather than arguedRequests answered within stated timeframes
Not credible whenthe same defect returns twice; documentation requests are treated as an offense; a seventy-two-hour close is asserted.
Rules of the Road
The KYC templates that circulate the internet usually include a document called Rules of the Road, or something carrying a different title and much the same language. Magister Operis and its institutional partner place no weight on it. Include it if you wish. What is weighed is the quality of every other document in the file — and the attitude of the party presenting it.
7–11 · ASSET MONETIZATION AND FUNDS SETTLEMENT
07Proof of Ownership
Isconfirmation from the party holding the asset that the applicant owns it.
DocumentsBank or custodial statementEuroclear or depository screenSafe keeping receiptDeposit and payment receiptsWarranty deed for real propertyBank or law-firm attestation
Credible whenIssued by the holding institution, not the ownerDated within the institution's stated currency periodVerifiable at source without the owner's participationApplicant is the ultimate beneficial owner of the account, not just a signatory or cardholder
Not credible whenholding institution "does not issue those"; verification only through an intermediary.
08Valuation and Appraisals
Isa value attributed by a party independent of the transaction.
DocumentsValuation or appraisal reportAppraiser credentials and registrationMunicipal tax valuation for real propertyCurrent insurance binder
Credible whenAppraiser independent of buyer, seller, owner and/or intermediariesAppraiser identifiable and contactableMethodology statedReport current
Reference testthe advance rate the holding institution will lend against the asset is the operative value.
Not credible whenround figure with no supporting instrument; appraiser unidentifiable or of weak industry reputation; appraiser using a free email account; valuation commissioned by a party holding an interest in the figure; insurance "pending".
09History of Assets
Isthe documented route by which the asset reached its present holder.
DocumentsOrigin documentationSuccessive ownership recordsStorage and custody recordsPurchase contractHistory of the funds used to purchase the assetTaxes paid on acquisitionAssay, refinery or modification recordsTransport and customs documents at origin and destination
Credible whenChain unbroken from originEach transfer supported by a contemporaneous documentCross-border movements matched by customs entries at both ends
Not credible whenprovenance begins at the current holder; custody gaps unexplained; account varies between tellings.
10History of Funds
TerminologyFunds and assets are distinct and are not interchangeable in a legal document. Funds are money. An asset is property — bullion, a bank instrument, a security, real property. A party holding an asset does not hold funds, and a document asserting proof of funds where an asset is held, or describing the origin of funds where the origin of an asset is meant, has used the wrong terminology. Item 9 governs the asset. This item governs the money.
Isthe origin of the money, stated as the commercial event that produced it — a business sold, a contract performed, property disposed of, a dividend, a distribution, an inheritance — not an assurance about its character. Where the asset was purchased: the history of the funds used to purchase it. Where the asset is cash: the history of how those funds were generated. In both cases, the legal contracts involved.
DocumentsSource-of-funds and source-of-wealth statementUnderlying contractsSale agreementsAudited accountsTax filingsBank statements covering the generating period
Credible whenFunds trace to identified commercial transactions rather than to a person or a placeThe contracts underlying each are producedThe period covered is continuous with no unexplained gapPurchase-money history is evidenced independently of the asset documentation
Not credible whena declaration that the funds are “clean, clear and of non-criminal origin” is offered in place of the origin itself; source stated as “private investors” with no names; the trail stops at a jurisdiction, an institution or a person rather than at a transaction; any element rests on the applicant’s word.
Terminology — explained
A party holds stones appraised at USD 2 billion.
- It does not hold USD 2 billion in funds. It holds no money.
- It does not hold USD 2 billion in liquid assets. Nothing is liquid until it is sold or lent against.
- It holds hard assets — stones — carrying an appraisal of USD 2 billion. The appraisal is an opinion. The operative value is what an institution will lend against them.
“Clean, clear and of non-criminal origin” is a characterization, not an origin. What a compliance officer is looking for within the History of Asset page and other supporting documentation:
- Which hole in the ground did they come out of?
- How did they travel from that hole to being held under a Safe Keeping Receipt?
- Where are the customs receipts for every border crossed?
- What taxes and duties were paid, and where are the filings?
- What is the history of the funds used to purchase them?
- Or, where the mine is owned by the party — where is the mining license?
Every one is answered by a document issued by somebody other than the owner. None is answered by an attestation of good character. Put yourself in the position of a compliance officer who has to authenticate these facts to the satisfaction of the bank’s board. None is answered by an attestation of good character.
The document follows the asset class: cash → a funds document; securities → a securities document; hard assets → an assets document. A history-of-funds form completed by a party holding bullion is not a defective answer — it is the wrong document.
A document must be worded for the use concurrent with its title in order to earn respect. A document titled History of Funds addresses funds. A document titled History of Assets addresses the asset. Where the title and the contents do not agree, the compliance officer stops reading and asks who drafted it.
11Use of Funds
Isthe stated destination of the capital.
DocumentsExecutive summaryBusiness plan with use-of-funds scheduleDrawdown scheduleAccounting and legal firms engaged for the deployment
Credible whenAllocation itemized by amount and purposeFigures reconcile across all documentsNamed professional firms attached
Not credible whenpurpose stated as a sector; figures disagree between documents; a transfer described as project funding with no project identified.
12–17 · PROJECT FUNDING
12Credible Business Plan
Isthe commercial case, in figures.
DocumentsExecutive summaryPrincipal detailsFinancial model with pro forma P&L, balance sheet and cash flowStated assumptionsSensitivity analysis
Credible whenAssumptions stated and sourcedModel rebuildable by a third partyRevenue follows asset completionTotals reconcile to the funding request
Not credible whenprojections without stated assumptions; revenue preceding the producing asset; evidence of reuse from another project.
13Credible Feasibility
Isindependent confirmation that demand and returns exist.
DocumentsFeasibility studyMarket studyCertification by an international bank, accounting firm or law firmNamed purchasers and their capacity to pay
Credible whenCertified by a firm of standing carrying professional liabilityDemand evidenced by named buyers rather than market sizeTechnical feasibility addressed separately from commercial
Not credible whenuncertified; demand evidenced by an industry statistic; no purchaser has committed.
Before you commissionDiscuss a feasibility study with Magister Operis before paying for one. A sister financial-modeling company of the institutional partner acts as its fundraising and financial-administrative arm, providing capital-alignment forecasts for investment durations of up to thirty years, with a methodology in a leading global position for over ten years. A team of PhDs and proprietary award-winning predictive modeling software runs scenarios for risk, opportunity, crisis and investment assessment, with stress-testing for feasibility and resilience, covering shareholder and stakeholder benefit options and informing policy and implementation. Those reports let investors, shareholders and banks make precise decisions on investments above USD 100M.
14Collateral
Isthe security supporting the facility.
DocumentsInstrument or asset documentationConfirmation from the holding institutionOwnership evidence per item 7Encumbrance searchCollateral provider's KYC package
Credible whenConfirmed by the holding institutionUnencumbered and not pledged elsewhereA security interest can be perfected in the relevant jurisdictionProvider identified and screened
Not credible when"available upon LOI"; provider will not be identified; same collateral known to support other transactions.
Notewhere the project owner is not the collateral owner, the collateral provider is the counterparty to the funding decision.
15Credible EPC Contractor
Isthe firm accountable for delivering the built asset.
DocumentsCompany profile and registrationCompleted projects at comparable scale with referencesFinancial statementsBonding and insurance capacityExecuted or draft EPC contract
Credible whenComparable completions verifiable with named clientsBonding capacity matches contract valueContract executed or at final draft
Not credible whennamed without engagement; portfolio unverifiable; there can be exceptions, but the largest completed project is significantly smaller than the one proposed.
16Credible Operator
Isthe party running the asset after completion.
DocumentsOperator profile and registrationOperating history in the same sectorDraft or executed operations and maintenance agreementOperating budget
Credible whenOperating history verifiableAgreement term matches the repayment periodOperating costs in the financial model match the agreement
Not credible when"to be determined post-construction"; no agreement; operating cost line with no operator behind it.
17Off-Take Agreements
Isthe contracted source of repayment.
DocumentsOff-take agreements, or power purchase agreements where energy is involvedPurchaser financial standingPricing and volume termsTerm matched to the facility
Credible whenExecuted and bindingPurchaser creditworthy and evidencedVolumes and pricing reconcile to the financial modelTerm equals or exceeds the repayment period
Not credible when"under negotiation" without a date; purchaser capacity to pay undocumented; a memorandum of understanding presented as a contract.
Submission Format
Assembly is a discipline separate from the documents themselves. A package assembled by someone who has done it before behaves predictably: the institution finds what it looks for without having to ask, and the decision comes quickly. Without that, a package can hold every required document and still take months, because each item is requested and chased one at a time. Two files holding identical documents do not receive identical treatment.
- One date format throughout. Entity names identical across every document.
- Owned-domain addresses for every party.
- No instructions, guidance notes, template text, placeholders or editing marks. A funding institution does not need to be told how to complete a document.
- Fields that do not apply are removed — not left blank, and not filled with “N/A”. A document carrying either reads as having been prepared by someone without the skill to prepare it.
Standing
Government or municipal authoritymandate and contracting authority over the site, stream or concession. No financial disclosure requested.
Utility or industrial operatorcorporate standing, site or offtake, authority to contract.
Investor, fund or collateral provideraudited proof of funds via a licensed external auditor, documented ultimate beneficial ownership, complete KYC/AML package.
Intermediarydisclosure of the chain, and a route to the ultimate beneficial owner or their counsel.
Two further notes
- Telephone numbers matter as much as addresses. Names, entities, addresses and telephone numbers are screened as a matter of routine against commercial risk databases — LexisNexis Risk Solutions, LSEG World-Check, Dow Jones Risk & Compliance, Moody’s Grid and their equivalents. These cover corporate registries, sanctions and politically exposed person lists, litigation records, adverse media and public records across most jurisdictions. A number that is missing, wrong or unanswered is an open item, and an open item holds the file.
- Sanitizing documents is understandable and still a mistake. Intermediaries redact contact details fearing circumvention, but a redacted file is not read as cautious — it is read as unfinished. An incomplete document is itself a red flag: a gap the sender created is indistinguishable from a gap the sender is hiding. Circumvention is addressed by agreement between the parties, not by omission from the documents.
Engagement
- A funding institution does not review a transaction until its documentation meets this standard. Until then the file is not being considered, declined or queued — it is not in front of anyone. Magister Operis has received substantial one-on-one KYC/AML compliance training from those who wrote regulations and trade programs for the banks.
- Three routes are equivalent: correct it internally, engage another professional, or retain Magister Operis. Which is taken is immaterial. Where Magister Operis is retained, it is on any item on this page, from the correspondence domain through to the assembled package. A custom quotation is provided on request — see Integrity as a Service.
- Every day it remains outstanding is a day added to the close, and it is the one interval wholly within the party’s control.
- Compensation on a transaction is a success fee, agreed in advance. Assembly of documentation is a separate engagement at published hourly rates — not carried against the success fee, and priced similarly to the same work performed by a competent law firm.