KYC cover


What does KYC stand for?

KYC stands for Know Your Customer. In practice, it’s a set of legally mandated protocols meant to prevent financial crimes like money laundering and, in the process, protect banks, financial institutions and other organizations from the risk of fraud.


What are KYC requirements?

Regulated industries have KYC requirements. Depending on the country you’re doing business in, the strictness of these requirements can vary a great deal. There are KYC requirements on a personal level:

  • Identity verification for the person who’s opening the account: ensuring they are who they say they are
  • Customer due diligence: determining the risk of doing business with this individual
  • Ongoing monitoring of the account


And there are KYC requirements on a business-to-business level:

  • Business verification: is the company a real business entity?
  • Customer due diligence: determining the risk factor for engaging with this company
  • Continuous monitoring of the business and its accounts


Who is responsible for KYC?

Typically, organizations designate a compliance officer to oversee the implementation of KYC and Anti-Money Laundering (AML) standards. Their responsibilities include ownership of the system and ensuring that processes are followed and updated as per the regulatory body’s changing requirements and properly instilled in the team.


Is KYC mandatory?

For regulated businesses, such as banks, lenders, and money transfer services, KYC is mandatory.


What is the benefit of KYC?

First and foremost, KYC compliance is required by law around the world. KYC compliance helps prevent fraud and other crimes by preventing flagged individuals from compromising a financial ecosystem and providing fewer avenues for criminals to launder their money.


What are the 3 components of KYC?

These are the three components of KYC:

  1. Customer Identification: making sure you know who your customer is
  2. Customer Due Diligence: making sure you know the risks involved with beginning a relationship with this customer. How do they make a living, and what kind of activity can you expect from their account?
  3. Customer Monitoring: making sure your customer behaves in the way you’d expect and hope them to



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