What is Know Your Customer (KYC) ?
KYC is an acronym for Know Your Customer, a legal requirement to perform identity checks and do customer due diligence. While KYC laws differ from country to country, the general principle involves collecting enough information to properly identify an individual and ensure that their activities are legitimate.
KYC policies have been expanding for some time and they have become very important globally. With issues pertaining to corruption, terrorist financing, and money laundering becoming so prevalent, KYC policies have now evolved into an important tool to combat illegal transactions in the international finance field.
Many financial institutions begin their KYC procedures by simply collecting basic data and information about their customers, ideally using electronic identity verification. Some countries call this a “Customer Identification Program”. Pieces of information such as names, social security numbers, birthdays, and addresses can be very useful when determining whether or not an individual is involved in a financial crime.
There are many steps that should be performed during KYC Procedure like:
- confirm identity by checking the authenticity of ID documents, expiry date and stolen/revoked lists.
- check and confirm the registrations numbers like Company Number from Companies House , VAT Number in VIES system etc and compare with the given person/company details
- check the legal form status – is it alive, not in liquidation state or dissolved.
- check the ultimate beneficial owner of the legal entity
- check the PEP Status of the person that is a UBO of legal entity or natural person customer
- check the sanction list (both personal UBO and legal entities forms)
To perform all the task above you can you a variety of specialized tools from many IT Companies worldwide.
Most of them could be done in very common and automated way thanks to the HyperFlow Platform.