Sunday, June 26, 2022
TechStoryTime - Guest Posting | Company/Product Review | Submit a Post
  • Home
  • Tech
    • Business
      • Finance
  • Software
    • Gadgets
    • App
  • Digital Marketing
  • Education
  • Reviews
    • Compare
    • Guide
  • Lifestyle
    • Health
    • Shopping
  • Internet
  • Write For Us
No Result
View All Result
  • Home
  • Tech
    • Business
      • Finance
  • Software
    • Gadgets
    • App
  • Digital Marketing
  • Education
  • Reviews
    • Compare
    • Guide
  • Lifestyle
    • Health
    • Shopping
  • Internet
  • Write For Us
No Result
View All Result
TechStoryTime - Guest Posting | Company/Product Review | Submit a Post
No Result
View All Result
Home Tech

What is Know Your Customer and Why It’s Important?

admin by admin
October 5, 2021
in Tech
Reading Time: 6 mins read
KYC Compliance
Share on FacebookShare on Twitter

Know Your Customer (KYC) is a standard due diligence procedure used by banks, investment firms, wealth management businesses, payment service providers, merchants, private lenders, and others to verify the identity of the entity they’re about to be in business with. While there is a legal obligation for businesses operating under financial institutions to comply with KYC laws, it is also a good habit that businesses should employ to prevent financial fraud and avoid fines from regulatory bodies of their respective jurisdictions. Achieving KYC compliance is time-consuming and expensive but doing so can help save businesses from countless acts of fraud.

While the term is thrown around commonly, not a lot of people really know what exactly KYC is. It’s the process of identifying who the investors or customers are and if their documents add up with their physical appearances. Getting detailed information about your customers includes getting ID documents. KYC serves a vital purpose for providing superior service, preventing liability from fraud and avoiding association with money laundering, and avoiding fines.

Importance of KYC 

Know Your Customer or KYC is a standard requirement all over the globe for businesses operating in the financial industry. KYC first came into existence under the Patriot Act after the attack of 9/11. It’s a procedure that helps in protecting all shareholders within the industry and it’s in the best interest of the business if they wish to protect themselves from fraud or hefty fines from regulatory bodies. 

In addition to conducting the KYC process while onboarding new customers, it is also to be conducted for recurring customers or for renewing the KYC policy of the firm. Businesses need to maintain accurate records and update the records.

Also Read:  AOL Email not Working, Fix AOL Mail Login Issue

Importance of KYC for Companies

Whenever a business operating under the financial industry complies with KYC regulations, they reduce their risk of bearing losses because of fraudulent activities. Knowing the source of a customer’s income, understanding their ability to invest in markets, and authenticating their identities are crucial questions that are asked while complying with KYC regulations. These due diligence checks also help in managing risks and in avoiding starting business relationships with customers that have the potential for illegal activities or have a history of conducting any kind of fraud. 

Complying with KYC rules and regulations also helps in building a better customer-business relationship and provides a better insight into the nature of customer transactions. Additionally, these regulations are a vital part of the customer onboarding process and they can significantly improve the customer experience of individuals and businesses. 

Importance of KYC for Customers

The need for KYC compliance may not be evident from the customer’s point of view, but legitimate customers can be saved from fraudsters, data breaches, and other harms. These rigorous checks can create unnecessary friction for customers, even though they create a secure environment for customers and financial institutions. 

Digital technology has allowed financial institutions for a much smoother, streamlined onboarding experience, which has transformed the process that used to weeks to months. The technology used in protecting sensitive information has also evolved, now banks and financial institutions use methods such as automated authentication and machine learning solution, and so on. 

Seamless KYC and the customer onboarding process can make your customers feel like they’re working with an authentic company and if they’re valued members of the organization.

Also Read:  Best AI Chatbots for Businesses in 2022 - Review and Features

A Deeper Understanding of KYC Compliance

KYC is not a particular thing, the exact steps may differ based on KYC laws across different countries, and most of the frameworks include some simple steps. A KYC process should focus on verifying the customer’s identity, investment suitability, and due diligence by using customer documents such as proof of address, government-issued ID, and proof of income documents.

1. Customer Identification

A critical element to successfully complying with KYC regulations is assessing the level of risk process, and it’s up to the organization to determine the exact KYC policy to counter potential issues and ensure compliance. 

Minimum requirements for customer ID include:

  • Name
  • DOB
  • Address
  • ID Number
  • Tax Number
  • Investment Experience
  • Investment Preferences
  • Income and Assets

After collecting the information businesses need to make sure that they verify the identity of the customer. 

2. Customer Due Diligence

For any business to survive in the financial industry, another major aspect of KYC is to be able to trust the customer. Customer Due Diligence is the process of verifying if customers are legitimate or not. Customer Due Diligence usually incorporates a few of the steps:

  • Determining and verifying the identity and location of potential customer
  • Having a better understanding of customer’s business activities
  • Analyzing potential risks associated with a customer
  • Storing and monitoring customer data
  • Performing due diligence checks to determine if the existing risk category is still applicable. 

3. Continuous Monitoring

Checking your customer’s background just once isn’t enough for building long-term customer business trust. This is why it is vital for businesses to continuously monitor customer transactions. This includes overseeing financial transactions and accounts focused on thresholds determined during the risk assessment process. 

Also Read:  Developing Gaming Mobile App With ReactNative in 2022
Tags: importance of kycimportance of kyc for companiesimportance of kyc for customerskyc compliancekyc regulations
Previous Post

How to Make a Food Delivery App at Low Cost?

Next Post

End-to-End AML Compliance: What Is It & How It Helps Businesses?

Related Posts

godaddy-email-login
Tech

Pros and Cons of Godaddy Email Login in Webmail

June 4, 2022
hotmail-syncing-issues
Tech

Hotmail Not Syncing With Devices, Fix Hotmail Syncing Issues

May 27, 2022
snapchat not working
Tech

How to Resolve the Issues Regarding Snapchat Not Working?

May 25, 2022
best ai chatbot
Tech

Best AI Chatbots for Businesses in 2022 – Review and Features

March 31, 2022
aol mail login troubleshot
Tech

AOL Email not Working, Fix AOL Mail Login Issue

May 19, 2022
att internet review
Reviews

AT&T Internet Review 2022: Top Internet Plans From AT&T

May 20, 2022

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Posts

aditsm
Education

ADITSM: Advanced Diploma in Information Technology and System Management

June 25, 2022
bundle deals
Internet

Internet Providers with Best Bundle Plans

June 22, 2022
Internet

What is ColdevProLayer – Uses, Pros and Cons, and More

June 22, 2022
3d-hologram-technology
Business

FDA Clears 3D Hologram Tech for Surgical Planning – Reality or Science Fiction

June 21, 2022
best_time_to_post_on_tiktok
App

What Is The Best Time to Post on TikTok? Complete 2022 Guide

June 17, 2022

Trending

aol mail login troubleshot

AOL Email not Working, Fix AOL Mail Login Issue

May 19, 2022
snapchat not working

How to Resolve the Issues Regarding Snapchat Not Working?

May 25, 2022
data mapping tools

Best Data Mapping Tools 2022 – Which Ones Should You Choose?

March 15, 2022
Flights to India from NYC

Family Fun Activities and Attractions in Williamsburg

April 14, 2022

AFDAH: Best 130 Alternatives to Watch Movies and Shows 2022

June 23, 2022

Browse by Category

  • App
  • Business
  • Compare
  • Digital Marketing
  • Education
  • Entertainment
  • Finance
  • Gadget
  • Guide
  • Health
  • Internet
  • Lifestyle
  • Reviews
  • Shopping
  • Software
  • Tech
  • Uncategorized

Recent News

aditsm

ADITSM: Advanced Diploma in Information Technology and System Management

June 25, 2022
bundle deals

Internet Providers with Best Bundle Plans

June 22, 2022
  • Facebook
  • Instagram
  • LinkedIn
  • Twitter

© 2022 Copyright TechStoryTime. ALL RIGHT RESERVED.

No Result
View All Result
  • Home
  • Tech
    • Business
      • Finance
  • Software
    • Gadgets
    • App
  • Digital Marketing
  • Education
  • Reviews
    • Compare
    • Guide
  • Lifestyle
    • Health
    • Shopping
  • Internet
  • Write For Us

© 2022 Copyright TechStoryTime. ALL RIGHT RESERVED.