Know Your Customer (KYC)

Definition of KYC
Know Your Customer (KYC) refers to the process of verifying the identity of customers, as well as assessing their potential risks, before entering into a business relationship. KYC is essential for preventing fraud, money laundering, and other financial crimes, and is a legal requirement in many jurisdictions.
The Three Stages of KYC
The KYC process typically involves three stages:
  1. 1.
    Identification: In this stage, the customer's identity is established by collecting their personal information and ID documents, such as passports or driver's licenses.
  2. 2.
    Verification: The collected information is cross-checked with trusted data sources to confirm its accuracy.
  3. 3.
    Risk Assessment: In this stage, the customer's risk profile is evaluated based on their personal and financial information, and any potential risks are identified.
Information Collected in KYC
KYC involves collecting a range of information from customers, including:
  • Name
  • Address
  • Date of birth
  • Government-issued identification documents, such as passports or driver's licenses
This information is used to verify the customer's identity and assess their potential risk, based on factors such as their occupation, income, and transaction history.
KYC is a crucial aspect of any security solution that deals with financial transactions. By ensuring that only legitimate customers are allowed to conduct business and by identifying potential risks, KYC helps to protect both businesses and their customers from financial crimes and fraud.