KYC is all about verifying the identities of your customers, clients and suppliers. It’s also about linking a person to a digital identity.
KYC checks will help prevent you onboarding customers who are involved with various types of fraud, such as money laundering, and/or illegal activity, such as financing terrorism.
Financial institutions use KYC to protect themselves from being used by criminals looking to move illicit money. KYC also helps organisations to better understand and manage risk.
KYC is something of an umbrella terms that encompasses a range of activity that helps you identify and verify a customer.
At a minimum, you should conduct KYC checks when you onboard a new customer, but for a more robust approach, KYC should be an ongoing process of checking and monitoring your customers and their typical behaviour.
You can be fined by regulators and, in more serious cases, face criminal prosecution.
What’s more, those penalties for non-compliance could make the headlines, which can cause immeasurable damage to your reputation and put potential customers off doing business with you in future.