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Wealth Migrate: Know Your Client (KYC) Process And Its Importance

Blog, Company, Investing, Investor Basics, Knowledge Base, Portfolio, Resources, Uncategorized /

As an investor you want the peace of mind to know that any financial transactions you complete on the Wealth Migrate platform are secure and comply with all necessary legal regulations. It’s for this reason that Wealth Migrate requires you to complete the Know your client (KYC) process before you can officially start crowdfunding real estate and structured note investments online. 

KYC is an important part of the trust-building process between Wealth Migrate and its investors, as it allows potential investors to identify and verify themselves.1 This is the first step in Wealth Migrate’s due diligence process which ensures that not only do our investors have peace of mind with their financial transactions, but that Wealth Migrate is a licenced company that upholds the laws applicable to its business and investors. On behalf of the company, it also needs to ensure it’s not dealing with investors that may be involved in illegal activities such as money laundering or fraud.2 

A crucial part of this process is by aggregating our global investors into a compliant special purpose vehicle (SPV) to create an investment network. This system screens and regulates against anti-money laundering (AML) and know your client (KYC) processes upon member registration. The financial transaction system handles all payments from investors and distributions back to investors. With America’s strict countenance on counter-terrorism and anti-fraud laws, Wealth Migrate isn’t prepared to accept the risks of investors from the United States of America. 
 

Additionally, Wealth Migrate has a valid Category 1 licence (FSP 47394) as granted by the Financial Services Conduct Authority, and this licence allows Wealth Migrate to provide its crowdfunding offering on an intermediary services basis using shares as a financial product category.3 The company is therefore held liable by the Financial Services Conduct Authority for complying with laws regarding its financial transactions.  

The KYC onboarding process is therefore a significant step to reduce the potential risks for both parties and ensure that the company and its investors are interacting in a trustworthy manner.4 The company is taking due care to ensure that the potential investor is who they claim to be and is using funds obtained legally for a legitimate purpose. This also works in the favour of an investor as the company must uphold its duties and responsibilities as well as provide transparency about its business as a licenced financial services provider. 

What information is needed to KYC? 

Some basic information is needed to ensure the investor’s identity is correct such as their full name, date of birth address and identification number. The documentation for submission needs to provide proof of the person’s identity, place of residence, and the funds for investment.5 

Typical documents include:6 

  • A driver’s licence 
  • A passport 
  • An identity document 
  • Utility statements for a mobile phone, electricity, or water 
  • Rental contract  
  • Bank statements 

How to KYC on the Wealth Migrate platform 

We’ve made this process easier and simpler as all the documentation can be submitted online. Investors will firstly need to sign up and create an account on Wealth Migrate and then undergo the KYC process. Within three days from submission, the KYC Team will do a preliminary cross-reference check and provide feedback via e-mail. 

Follow these steps to achieve a successful KYC process: 

Step one: 

  1. Create your investor account – register with your chosen e-mail address and password. 
  1. Country of residence – select the country on the drop-down menu. 
  1. Select your investor category – click on the type of investor profile that suits your investment style. 

Step two: 

You will be required to upload the following documents: 

  • Two forms of identification including the front and back of:
    • a driver’s licence 
    • an ID card 
    • and/or a colour copy of your valid passport 
  • A recent proof of address, no older than three months of either: 
    • a utility bill,  
    • a rates and taxes bill or Council Tax bill 
    • a mobile phone statement 
  • Bank statements will not be accepted as proof of address 
  • A full-page bank statement, no older than three months 

Step three: 

  1. You will receive an automated e-mail once your profile has been verified. 
  1. Your KYC status will display as ‘approved’ on your profile. 

We’ve also made some visual guides available as a downloadable PDF or video to help our members with this process so that they can start investing with ease. Download our thorough step-by-step guide here for an in-depth overview of the KYC process or view our quick “How to KYC” tutorial video here. 

Explore the investment deals available on Wealth Migrate’s Fintech platform and use these visual tutorials as a guide on your wealth creation journey – click here to learn how to invest, and learn to understand and interpret your investment portfolio, here. 

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Understanding the role of a sponsor in commercial real estate

Investing, Investing, Investor Basics, Uncategorized, Using Wealth Migrate /

For anyone interested in investing in commercial real estate, it is important to understand the roles of the parties involved. The sponsor plays an active part in the success of the investment, while the investor has a more passive role.

A sponsor is responsible for “finding, acquiring, managing, and eventually disposing of real estate property on behalf of the partnership [1] Sponsors own the property, run day-to-day operations, oversee the transactions, raise money from investors, and are accountable for the mortgage of the property.[2]  Due to the wide scope of responsibility, selecting the sponsor with credible experience and a successful track record is critical for the well-being.[3]

Wealth Migrate vets our sponsors in our marketplace in accordance with all security and legal compliance checks. This responsibility on our part makes it easier for our investors to focus on the process of investing.

We evaluate our sponsors according to the check list below:[4]

  • How much experience does the sponsor have in the local marketing and that asset class?
  • Have any of the sponsor’s development projects failed to meet expectations?
  • How capable is the sponsor in evaluating risks?
  • How does the sponsor identify other equity investors and secure debt?
  • What systems does the sponsor have in place to ensure proper management of the project? 

The sponsor is mainly responsible for the performance of the property as well as financial reporting, making payments to investors, and preparing tax statements during the tax season.[5] As the time and cost involved that goes into preparing to acquire a deal is quite substantial, an acquisition fee is usually charged to cover costs and compensate sponsors for their work.

Sponsors make money with an acquisition fee, through ownership in a deal that ranges from 5%-10% in total equity, and annual asset management fees.[6] Sponsors are also incentivised by performance with a promote structure and preferred return.[7] This means that an investor is guaranteed a full return of their initial investment amount for a preferred return. 

Due to the importance of the sponsor, individual investors will ordinarily have to thoroughly research a potential sponsor. A sponsor must be trusted, have credibility, a proven track record, connections to right financing and equity relationships, and other expertise in operations and management. In terms of Wealth Migrate’s service offering, our investors can trust that we have performed the required due diligence before we partner with any of our sponsors.

[1] Kennedy, K. (March 2019). ‘The Importance of a reputable property investment sponsor’. Retrieved from LinkedIn.
[2] McKenna, R. (May 2019). ‘ Insider’s guide to vetting a commercial real estate sponsor ‘. Retrieved from BiggerPockets.
[3] McKenna, R. (May 2019). ‘ Insider’s guide to vetting a commercial real estate sponsor ‘. Retrieved from BiggerPockets.
[4] Robinson, D. (July 2019). ‘ Real estate sponsorship and sponsor equity: The key to selecting a great sponsor’. Retrieved from Black Collie Capital.
[5] Kennedy, K. (March 2019). ‘The Importance of a reputable property investment sponsor’. Retrieved from LinkedIn.
[6] Frankel, M. (February 2021). ‘ What is sponsor promote in real estate? ‘. Retrieved from Millionacres.
[7] Frankel, M. (February 2021). ‘ What is sponsor promote in real estate? ‘. Retrieved from Millionacres.

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