Hello everyone, we did a short description on these terms so that we have a better understanding on all! Wondering what these are, and how they work? Let’s break each one down now.
KYC (Know Your Customer), AML (Anti Money Laundering) and PEP (Politically Exposed Person) verifications are required for most financial companies — are going to become even more important for FinTech startups and cryptocurrency companies in the future.
KYC — Know Your Customer
KYC means “Know Your Customer” — and that’s exactly what these policies are for, and how they work. Essentially, KYC is used whenever someone tries to open an account or make a financial transaction. KYC software and process typically involve:
- Identity verification, confirmation of citizenship/country of a person’s origin
- Examining a person for any links to illicit activity
- Asking about the source/destination of funds that are being moved
- Examining suspicious transactions or assessing abnormally large transaction volumes
Each company uses different KYC software and methodologies — but, generally, KYC is always used as a way to monitor a particular person, flag transactions that may be illegal, and detect any illicit activity.
AML — Anti Money Laundering
AML is similar to KYC, but focused on money laundering — that is, transforming illegally-derived profits into “clean” or “legitimate” assets. Steps commonly taken with AML regulations and software include:
- Monitoring for regular transactions in excess of $10,000, or near this threshold
- Requiring banks and credit card companies to report certain types of transactions to the US Department of the Treasury
- Control the movement of foreign or domestic cash both abroad and domestically
- Obtain proper KYC information to confirm a person’s identity, and see if they have been involved in illicit activity
These steps, along with criminal sanctions, are designed to help recognize and seize illegal funds, and prevent crime.
PEP — Politically Exposed Persons (Monitoring)
A PEP is anyone from a foreign country, entrusted with a prominent public function, such as a foreign minister, ambassador, or another high-ranking official. PEP monitoring is used to help ensure that these individuals are not abusing their power to embezzle or otherwise steal and misuse funds. Their immediate family members may also be monitored.
Generally, this is done by using a combination of KYC and AML techniques — the person’s funds and assets are closely monitored, suspicious activity is reported, and they are scrutinized regularly to make sure that they are not engaging in any illicit or unlawful activity.
Know What KYC, AML, And PEP Are — And Why They’re Important!
For financial regulators and governments, KYC, AML, and PEP are all critical for preventing unlawful use of banks, money laundering, theft, and other such illegal activities. That’s why they’re so important — and why the market for KYC, AML, and PEP software is growing so quickly.
We are offering 1 month of Free KYC for all companies, read more here: https://verifer.io/kyc_1month_campaign .
Let’s discuss on any of our social media channels or telegram:
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