What you must know about KYC

KYC (Know your customer) is a concept born in the USA and has quickly become popular in other countries. This is the name given to the process of verifying the identity of a company’s customers. This process is adopted by the banks to gather a set of information on each of their customers, to better identify them and protect them against financial crimes.

For decades, the banks have faced various scandals related to money laundering and the disappearance of bank accounts; Mobutu Sese of Zaire, Moses Tshombe of Katanga, Abacha of Nigeria and Marcos of the Philippines are examples whose consequences remain on the states of which they were citizens. It should also be noted that 187 billion euros in fines have been paid by banks since 2017 globally.
In view of this, we agree that data is at the heart of banking and financial activities, and data related to customer knowledge is undeniably strategic.

Several audit institutions including the Financial Action Task Force (FATF) have been set up to monitor financial institutions, review and develop anti-money laundering measures. Financial penalties have been established, putting pressure on banks to develop new practices to ensure the collection and security of customer data.

Indeed, KYC is a legal and mandatory procedure for all banks that involves the regular verification of customer information (identity, proof of residence, professional activities related to the customer, etc …). In summary, each customer has a KYC profile which is confidential and must be updated in case of change.

KYC is an important element to consider. Today, thanks to KYC, banks have the opportunity to establish a more personalized relationship with their customers, enabling them to better understand the customer’s need and to offer banking services and products adapted to the demand.