KYC, or ‘Know Your Customer’, is a process used by businesses to verify the identity of their customers. The practice is typically used by financial institutions, in order to prevent money laundering and other financial crimes. The KYC process involves gathering personal information from customers, such as their full name, date of birth, address, and other details.
The gathered information is then verified by the institution with the applicable authentication documents, such as a valid ID or passport. Depending on the specific requirements of the institution, additional documents, such as proof of residency or financial references, may also be needed.
Once the verification process is complete, the institution will then have a basic understanding of who the customer is and what their level of financial activity may involve. This helps them to monitor payments in and out of the account and detect suspicious or fraudulent activity.
It also allows them to keep their customers informed of any new or amended regulations that may affect them. The KYC process is an essential part of secure financial transactions as it helps to ensure that all parties involved are in compliance with relevant regulations and laws.
By having a clear understanding of who their customers are and what their activity involves, businesses can protect themselves against financial crimes and fraud.