Know Your Customer (KYC)

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Know Your Customer, commonly abbreviated as KYC, refers to the critical process that businesses undertake to verify the identity of their clients, both at the point of onboarding and periodically throughout the business relationship. This due diligence is a cornerstone of anti-money laundering (AML) and counter-terrorist financing (CTF) efforts globally.

The KYC process typically involves collecting and verifying customer information, such as official identification documents (e.g., passports, driver’s licenses) and proof of address. For corporate clients, this extends to understanding their beneficial ownership and legal structure. The intensity of these checks can vary based on a risk-based assessment, with higher-risk customers undergoing more enhanced due diligence.

By accurately identifying and understanding their customers, organizations can better assess risks, prevent illicit activities, ensure compliance with legal frameworks like the Bank Secrecy Act (BSA) and directives from bodies such as the Financial Action Task Force (FATF), and foster a more secure and trustworthy business environment.

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