The Importance of KYC (Know Your Customer)

What is KYC and why is it important?

You can’t build trust in an instant. When making friends, you don’t automatically trust that person, first you get to know them, their likes and interests, and see how you’d click together. Once trust is built, you can easily open up more and do things together, borrow clothes from one another, and maybe lend each other money sometimes.

Same with KYC or Know Your Customer. It is a standard and mandatory process for identifying and verifying customers around the globe. It is an incredibly important practice that serves as the backbone of today’s financial institutions in avoiding identity theft, terrorist financing, money laundering, and financial fraud. Apart from being a legal and regulatory requirement, KYC is a good business practice to better understand investment objectives and significantly reduce the risk from suspicious activities.

In a nutshell, KYC is the process of thoroughly getting to know who your investors are, verifying your client’s fund sources (if they are legitimate or not), and requiring detailed anti-money laundering (AML) information from them.

Know Your Customer means exactly just that, it is the process of getting to know your customers before providing them access to your services.

What is AML?

Anti-Money Laundering (AML pertains to a set of laws, regulations and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income.

According to Investopedia, here are some of the key takeaways regarding AML;

  • Anti-Money Laundering (AML) seeks to deter criminals by making it harder for them to hide ill-gotten money.
  • Criminals use money laundering to conceal their crimes and the money derived from them.
  • AML regulations require financial institutions to monitor customers' transactions and report on suspicious financial activity.

KYC vs. AML

While closely related, there is a difference between Know Your Customer and Anti-Money Laundering. KYC – usually in banking, is the process that institutions must take in order to verify their customers’ identities before providing any services. AML works on a much broader level and are the measures that institutions take to prevent and detect terrorism financing, money laundering, and other financial crimes. Banks use AML/KYC compliance to maintain secure financial institutions.

What is GlobalID?

GlobalID is an Anti- Money Laundering (AML) compliance platform that provides instant verification of a customer’s background (KYC). The platform leverages cryptographic security mechanisms employed in distributed ledger technologies to ensure that data cannot be tampered with, while allowing users full control over how their data is stored and shared. The system is user-friendly for applicants while adhering to strict AML policy guidelines.

GlobalID is a unique Biometric-driven, KYC/AML compliant, omni-channel white label full service regtech platform that specializes in helping small businesses and large corporations and institutions alike – companies which are in need of collecting and managing identifying information about a person and/or a business where KYC/AML compliant “Profile Collection” is required.

Worry no more about your KYC and AML needs. Get started with GlobalID today. Click https://www.globalid.io/ to learn more.

References:

https://www.investopedia.com/terms/a/aml.asp

https://olegroupinc.com/

https://www.globalid.io/

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Photo by Anastasiia Ostapovych on Unsplash