Know Your Customer (KYC) is vital for banks and financial institutions to understand thoroughly.
What is KYC, and how does it benefit financial industries, as well as their customers? money-laundering, terrorist and financial crimes, and more.
Financial institutions are at high risk of being taken advantage of by terrorists, identity thieves, and cyber criminals. It is pertinent that banks and financial institutions know their customers are exactly who they claim to be. Knowing Your Customer prevents companies from losing enormous amounts of money, and protects both financial institutions as well as the general public, from falling victim to financial crimes. KYC can help prevent terrorists from infiltrating the U.S. economy, and helps keep all of us safe. What’s more, by creating a culture of transparency, KYC builds trust between the general public and the financial institutions they utilize.
In May, 2018, the Financial Crimes Enforcement Network (FinCEN) and the EU General Data Protection Regulation (GDPR) passed rules in both the United States and the European Union that make Know Your Customer (KYC) mandatory for lending institutions, banks, and other financial organizations.
Basic KYC includes the following:
- Verification of customer identities
- Amassing all customer identity documents
- Close monitoring of financial transactions above $10,000
- Recording any money that crosses national borders
- The collection of the name, birth date, address, and social security number of people who own 25% or more of an equity interest in a legal entity
Therefore, not only is KYC good business practice, but it is now a rule that is required by law. However, KYC is no easy feat, when we consider that cyber crimes are increasingly more common, identity theft is becoming more complicated to catch and prove, and financial institutions have limited manpower and financial resources,
How Can Financial Institutions Practice KYC Despite The Challenges it Presents?
At Liberty Data, Inc.’s REALSearch.com, users can quickly and easily get a head start on KYC. Rather than spending hours trying to verify customer identities or an organization’s responsible officers, this can be accomplished swiftly with our real-time, lightening-fast KYC results, allowing your energy and resources to be directed into your business rather than in doing research.