What is KYC & how does it work?

Current KYC procedures embrace a risk-based approach to counteract identity theft, money laundering, and financial fraud: Identity Theft: KYC helps financial institutions establish proof of a customer’s legal identity. This can prevent fake accounts and identity thefts from forged documents or stolen identity documents.

Do financial institutions need KYC?

KYC is required for any financial institution that deals with customers while opening and maintaining financial accounts. When a business onboards a new client, or when a current client acquires a regulated product, standard KYC procedures generally apply. Financial institutions that need to comply with KYC protocols include:

What are examples of KYC documents?

Examples of KYC documents include a passport, driver's license, or utility bill. KYC is a critical process for determining customer risk and whether the customer can meet the institution’s requirements to use their services. It’s also a legal requirement to comply with Anti-Money Laundering (AML) laws.

What are the two core KYC components of the Patriot Act?

Title III of the Patriot Act requires financial institutions to meet two core KYC components: the Customer Identification Program (CIP) and Customer Due Diligence (CDD). Current KYC procedures embrace a risk-based approach to counteract identity theft, money laundering, and financial fraud: