Know Your Customer (KYC) | B2B Finance Glossary
Sep 5, 2023 by Zazil Martinez
What is Know Your Customer? Know Your Customer (KYC) is a standard designed for the financial services industry that requires financial companies to identify and verify their customers’ identities when they open new accounts; KYC can also be used to periodically check in on customers to repeatedly verify their identities so that businesses can make sure that these customers are who they say they are. This standard was set to fight against money laundering, the funding of terrorist organizations, and other financial crimes. Essentially, KYC allows financial institutions to confirm that their clients are who they claim to be so that funds are not going to illicit causes. KYC involves several steps to verify a potential customer’s identity, understand the nature of the customer’s activities, qualify that the source of the customer’s funds is legitimate, and evaluate any money laundering risks that might be related to a potential customer. KYC checks are done through independent, reliable documents, data, or information sources. These processes require customers to provide credentials such as government ID verification, facial recognition and verification, biometric verification, and document verification for proof of address.
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