KYC, or Know Your Customer, is a process used by businesses and financial institutions to verify the identity and assess the risk of their customers. It is primarily used to prevent fraud, money laundering, and other illegal activities.
Imagine you’re a customer, and you’ve just applied for a new online banking account. The bank you’ve chosen takes KYC seriously to ensure the security and legitimacy of their customers.
NOTE: KYC procedures vary depending on the country, industry, and specific regulations, but here is a general overview of how KYC is typically done.
Here’s how the KYC process unfolds for you:
• Customer Identification:
After filling out the online application form, you receive a prompt to upload a clear photo of your identification document, such as your driver’s license or passport. You’re required submit it.
• Document Verification:
The bank’s automated system processes your photo and document, using advanced optical character recognition (OCR) technology to obtain the relevant information. The system then compares the data with government databases and known fraud patterns to ensure the authenticity of your identification.
• Address Verification:
As part of the KYC process, you’re required to provide proof of your residential address. You upload a scanned copy of a recent utility bill that clearly shows your name and address.
• Risk Assessment:
The bank’s assess your profile based on various factors, such as your occupation, income level, and transaction history. They also take into account any red flags like recent changes in employment or unusual financial activity.
They send you a secure message requesting additional documentation to validate the source of the funds. You promptly submit the requested documents, which may include proof of a recent inheritance.
• Ongoing Monitoring:
Once your account is fully active, the bank continuously monitors your transactions for any suspicious activities.
• Compliance Reporting:
The bank has a legal obligation to maintain proper records of their KYC procedures. Also, promptly report any suspicious transactions to the financial authorities. This collaboration helps prevent financial crimes, including money laundering and terrorist financing.
Throughout the KYC process, the bank’s goal is to provide you with a secure banking experience while fulfilling their legal and regulatory obligations.
So, that’s all about How KYC is done?