What Is KYC and Why Is It Important?
According to a?2020 PWC report, the average US organization experiences around six incidents of fraud every year, and customer fraud is the most prevalent.??
Financial service providers are important in preventing fraud and the influx of fraudulent money trying to enter the global financial system. For that reason, developing an understanding of what KYC is in banking compliance.
What Is KYC?
Know Your Customer (KYC) is a common practice in banking. It involves identifying and verifying customers. Identification usually entails collecting customers’ data, while verification means ensuring the data is accurate.??
For customer identification, banks need at least the following:?
To verify this data, banks can employ a document-based verification approach. This entails checking the customer’s proof of address and identity documents and authenticating their validity.?