HomeBlogKYC ProcessKnow About The KYC Process And Other Stuff!

Know About The KYC Process And Other Stuff!

KYC (Know Your Customer) is an essential set of processes related to banking and financial institutions. To know what a customer exactly wants what could satisfy them is the best form to fulfil it. This help the banking and financial processes get enriched and go smooth enough. So, we have mentioned all the essential aspects that complete the KYC process!

What exactly is KYC?

KYC, also known as “Know Your Customer”, is a set of processes allowing banks and various financial institutions to confirm the identities of organisations and individuals they have partnered with through business and ensure the entitles that act legally.

KYC

What does KYC do?

Not only do KYC allow banks and other financial institutions to confirm identities, but an effective KYC safeguards companies from doing business with individuals or specific organisations in illegal activities, such as corruption, terrorist financing, or money laundering. Also, it permits financial institutions to gain a better understanding of their businesses and customers, providing decent insights for financial institutions.

Traditional procedures in a KYC process

Most financial institutions begin the KYC process by asking their customers to give a bunch of essential information regarding their individuals and business operations. This will include the name of the company’s directors, national insurance number, business address, social security numbers, company number, etc. Along with this, there will be details asked pertaining to entities from open sources like addresses, names, registration numbers, annual reports, and stock exchange limits.

How does the process proceed further?

After collecting all the essential information, it is compared to the lists of organisations and individuals known by the law enforcement agencies and governments. There are specific aims by the lists. They are:

  • Identification of individuals who are suspected of being a part of any criminal activity
  • Providing intelligence on firms or individuals suspected of being a part of money laundering or bribery
  • Identification of Politically Exposed Persons (PEPs)
  • To get details about the international sanctions companies or individuals’ jurisdiction falls under.

US Department of State sanctions lists, State Sponsors of Terrorism list, Speciality Designated Nationals and Blocked person Lists (SDN), Transparency Index Lists from Transparency International, Financial Action Task Force lists (FATF) are some of the prominent examples of internationally published lists ever!

What is the need for KYC?

As mentioned earlier, an effective KYC can detect illegal activities taking place in this particular field. KYC is significant to combat unlawful activities used in the financial sectors to hide or move money, central banks, and governments globally. Also, the focus on KYC has maximised due to the increase in financial crime activities today, globally. Regulators are trying their best to strengthen KYC checks and have adapted the best methods to do so and thus, curb illegal activities in financial institutions!

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