What is KYC?

Know Your Customer (KYC) refers to the process of identifying and verifying your customers.

The term Know Your Customer (KYC) is a customer identification process where a customer’s identity, financial status and address are verified. The idea is that by knowing your customers – verifying identities, making sure they’re real, confirming they’re not on any prohibited lists and assessing their risk factors — can keep money laundering, terrorist financing and more run-of-the-mill fraud schemes at bay. Most KYC procedures now run online with optimised online KYC registration processes.

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KYC policy incorporates the following steps taken by financial institutions:

  • Establishing customer identity; collecting necessary identity documents from the customer
  • Monitoring the transactions of the customer, understanding the nature of their transactions
  • Management of risk associated with customer transactions

By first verifying customers’ identities and intentions and then understanding their transaction patterns, banks are able to more accurately pinpoint suspicious activities. From there, the bank then quantifies how much of a risk its clients appear to be and how likely they are to become involved in corrupt or illegal activity. KYC is an important part of any business. In order to provide financial services online, companies need to have methods for remote identification in order to be aligned with KYC standards. To make the KYC process as uncomplicated as possible simply makes sense.