What « know your customer » means.

Although the phrase « know your customer » may seem meaningless to most people, it has a very important meaning in the business world. The know-your-customer process, also known as KYC, is what companies do to verify the identity of their customers before or during the time they start doing business with them. The term KYC can also refer to regulated banking practices that are also used to verify the identity of customers.

Banks and businesses of all sizes have become big supporters of KYC. It is increasingly common for banking institutions, credit companies and insurance agencies to require their customers to provide them with detailed information to ensure that they are not involved in the bribery, bribery or money laundering . KYC policies have been expanding for quite some time and have become very prominent globally. Issues related to corruption, terrorist financingand with money laundering becoming more and more prevalent, KYC policies have now become an important tool to combat illegal transactions in the field of international finance. KYC allows businesses to protect themselves by ensuring they are doing business legally and with legitimate entities, and it also protects individuals who might otherwise be harmed by financial crimes.

Many financial institutions begin their KYC procedures by simply collecting basic customer data and information, ideally using electronic identity verification . Some countries call this a « Customer Identification Program ». Information such as names, social security numbers, birthdays and addresses can be very useful in determining whether or not someone is involved in a financial crime.

Once this basic data is collected, banks typically compare it to lists of individuals known to be corrupt, on a sanctions list, suspected of being involved in a crime, or at high risk of corruption or money laundering. capital . Financial institutions also review Politically Exposed Persons , or PEP, lists.

From there, the bank quantifies the risk their customer appears to be at and the likelihood that they are involved in corrupt or illegal activity. Once this calculation is done, the bank can give a theoretical overview of what this client’s account should look like in the near future. Once the planned account trajectory is in place, the bank can then constantly monitor the customer’s account activity and ensure that nothing seems out of place or suspicious.

Doing this for one person also allows financial institutions to compare that customer’s profile to that of their peers. If a bank has two customers who have very similar professions and backgrounds, and they are known to interact in their respective fields, it is assumed that their accounts will be quite similar.

Our Know Your Customer (KYC) solutions will help you comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.