KYC (Know your client or know your customer) is a mandatory procedure for verifying clients (individuals and legal entities), which includes the process of their selection and identification in order to establish secure financial transactions and compliance with the legal practice.
What is KYC for?
- It helps to prevent money laundering (linking to AML), terrorist financing and tax evasion;
- It increases the transparency of financial transactions;
- It protects the company from working with fraudsters;
- It allows to restrict minors or players from the regions the operator has no right to work in;
- It keeps your funds safe and protects them from loss or theft by intruders.
What KYC procedure consists of
As a rule, the KYC procedure consists of three parts:
- Identification. At this stage, the company collects the required information about a client and, subsequently, checks it for veracity.
- 360° inspection. In some cases, if the client seems to be suspicious or the amount of the transaction is large enough, the company may request additional information about the client.
- Regular monitoring. Includes periodic verification of the data provided by the client.
How to verify a client?
There is no specific list of documents that a client must provide as part of the KYC procedure. The company determines the list of required information depending on the type of client and their financial background.
Most often, the package of documents required for the KYC procedure includes
- a) Full name;
- b) Date of birth;
- c) E-mail;
- d) Phone number;
- e) Country and address of residence (sometimes with a documental proof or with a code in a letter sent to this address);
- f) ID (passport, driving license or any other identity document).