KYC = Know Your Customer

KYC, or Know Your Customer, is a crucial process that financial institutions and other businesses use to verify the identity of their clients. KYC is a regulatory requirement in many countries, and it plays a vital role in preventing money laundering, fraud, and other financial crimes.

KYC requirements vary from country to country, but the basic process involves collecting and verifying information about a client’s identity, business activities, and source of funds. 

The information collected can include personal data, such as:

  • Name
  • Address
  • Date of birth
  • Identification documents i.e. a passport or driver’s license
  • Occupation
  • Income
  • Financial history.

What is the information used for?

Once the information is collected, the business must verify its accuracy, this can be done by checking the information against public databases and verifying the authenticity of identification documents. In some cases, it may be necessary to hold an interview with the client. If the client is a business, the business may need to verify the ownership structure and business activities, as well as the identities of the beneficial owners.

Businesses will continue to monitor their clients’ activities in case of any suspicious behaviour. This involves keeping track of transactions and comparing them to the client’s stated business activities and source of funds. Any suspicious activity must be reported to the relevant authorities.

KYC is an extremely useful tool in the fight against financial crime, and businesses that fail to comply with KYC regulations can face severe penalties. In addition to legal sanctions, failure to comply with KYC requirements can irreparably damage a business’s reputation and destroy customers’ trust in the company.

A Sucessful KYC

A KYC check will normally involve providing:
  • A national photo identification card, passport or driver’s license
  • A utility bill or bank statement as proof of address

You may also be asked to provide biometric or face verification (selfie). It is mandatory that a KYC check takes place when opening an account.

If a person’s identity cannot be verified then the bank or financial institution may refuse to open the account.
It is very important when completing your KYC that the information provided matches exactly what is on the identity document you intend to provide for verification.
It is also very important that the images you upload are clear and easy to read.
CleverDo - Uploading your documents for KYC

Technological advances in KYC verification

In recent years, new technologies such as biometrics and artificial intelligence have been introduced to improve and refine the KYC process. Biometrics, such as facial recognition and fingerprint scanning, can help verify the identity of clients more quickly and securely. Artificial intelligence can help automate the due diligence process by analyzing data and identifying potential risks.

KYC is an essential process that businesses must undertake to verify the identity of their clients and prevent financial crimes. By verifying the accuracy of the information provided, businesses can ensure that their clients are legitimate and operating within the law. As technology continues to evolve, KYC processes are likely to become more efficient and effective.