KYC (Know Your Customer) is a process of identifying and verifying the identity of a customer before an account is opened or a transaction is completed. This is typically done by collecting and confirming personal information such as the customer’s name, address, government-issued identification number, and other relevant details. The goal of KYC is to ensure that the financial institution or company knows who its customers are and can monitor their transactions for suspicious activity, as well as to comply with laws and regulations intended to prevent fraud and money laundering.
The process of KYC may include steps such as:
- Collecting personal information from the customer, such as a government-issued ID and proof of address
- Verifying the customer’s identity using various means, such as by comparing the information provided by the customer with publicly available information or by checking the customer’s credit report
- Checking the customer against various lists of known or suspected criminals, money launderers, or other individuals with a history of financial fraud or illegal activity.
KYC is an important part of the compliance program of financial institutions and other regulated companies, which are required to implement KYC procedures by governments and regulatory bodies.
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