KYC stands for know your customer, or know your client, both terms are frequently used and are interchangeable. KYC is a process that organisations, particularly regulated organisations, use to verify the identity of customers.
Part of a risk assessment and anti-financial crime strategy, the aim of KYC is for organisations to understand whom they are doing business with and the risks of doing business with them. A KYC process involves collecting and verifying information about a customer, such as name, address, date of birth, and government-issued identification.
Organizations perform KYC for several reasons. First, it helps to establish trust with legitimate customers. Second, it is a regulatory requirement in many jurisdictions and failure to comply can result in fines and reputational damage. Third, KYC helps protect an organisation from involvement in financial crime, such as money laundering, terrorist financing, and fraud, by identifying high-risk customers, so they can make decisions with confidence about what to do next.
