#1 Full form of KYC= Know Your Customer
KYC’s full form is know your customer. The term is also used to refer to banking regulations and money laundering regulations that govern these activities.
Be aware that your customers’ processes are also employees of companies of all sizes to ensure that your proposed customers, agents, consultants or distributors comply with the requirements of corruption. Banks, insurers, export creditors and other financial institutions increasingly require customers to provide detailed information on due diligence.
Standards of KYC
The purpose of the KYC guidelines is to prevent the banks from various criminal activities or elements for money laundering activities. Related procedures also allow banks to better understand their customers and their financial transactions.
This helps them to manage their risks in a well-judged way. Nowadays, not only banks but also several online companies can implement KYC. In general, they frame their KYC policies by incorporating the following four key elements:
- Customer acceptance policy;
- Customer identification procedures;
- Transaction monitoring;
- and risk management.
The strict regulatory framework establishes the KYC as a mandatory and crucial procedure for financial institutions. Minimizes the risk of fraud by identifying previously suspicious elements in the customer-company relationship lifecycle. For the purposes of a KYC policy, a customer / user can be defined as:
- a person or entity that manages an account and / or has a business relationship with the bank;
- one in whose name the account is kept (ie, the beneficial owner);
- Beneficiaries of transactions carried out by professional intermediaries, such as stockbrokers, public accountants or lawyers, as permitted by law; or
any natural or legal person related to a financial transaction that may represent a reputational or other significant risk for the bank, for example, a bank transfer or the issuance of a high value value request such as a single transaction
Typical controls that modify KYC controls generally include the following:
Collection and analysis of personally identifiable information (PII). (referred to in US regulations and practices, such as the “Client Identification Program” or CIP).
Review of identity information (PII) against global checklists to determine the state of public exposure (politically exposed person or PEP) and adverse media.
Determination of the client’s risk in terms of money laundering, financing of terrorism or identity theft.
Creation and evaluation of a “client profile” based on the transactional behavior of a client
Monitoring of a client’s transactions with respect to the expected behaviour and the registered profile, as well as that of the client’s colleagues
Use cases of KYC
The use cases of KYC modify the
Client on board. Authentication / user registration.
High profile transaction processing.
Re-verification of existing users.
Ensure regulatory compliance.
Replacement of obsolete authentication mechanisms.
Strict and robust modification
In general, this means consistent, precise and precise. The process must be documented and available for inspection by regulatory authorities. The process must be SMART (specific, measurable, accessible, relevant and related), scalable and proportional to risk and resources.
Beyond the KYC procedures, the EDD files are based on the initial selection of the client. The EDD processes should use a multi-level approach that depends on the risk. The reliability of information and sources of information, the type and quality of information sources used, adequately trained analysts who know where to look for information, how to search and how to validate, interpret and interpret are fundamental to the integrity of any EDD process.
decide the results Business intelligence companies aggregate this information and compile it daily into a complete database. Many of these commercial information services companies are operated by local suppliers with field researchers who can obtain information that would not otherwise be easily accessible.
Modification of the reasonable guarantee.
What is reasonable depends on factors such as jurisdiction, risk, resources and state-of-the-art technology. For sanctions depends on the information provided by the regulatory authorities. In all cases, the suggested standard is the standard of civil judgment, that is, the balance of probability.
Examples include fraud and other forms of dishonesty, drug trafficking, smuggling or other prohibited crimes, references to money laundering or commercial activities, residents or frequenting countries considered by the Financial Action Task Force
What is KYCC?
KYCCC Edit KYCC or Customer’s Know Your Customer is a process that identifies the activities and nature of the client’s client. This includes the identification of such persons, the assessment of their associated risk levels and the associated activities of the client (company) of the client involved.
 KYCC is a derivative of the standard KYC process, which was necessary due to the increased risk of fraud by fraudulent individuals or companies, which otherwise could be hidden in second-tier business relationships. ie (to the customer of the customer).
Is KYC really a must?
There is no escape from KYC in the world of financial and banking transactions. In case you did not know, KYC means “Know your customer”. It is a mandatory process to identify and verify customers around the world.
Originally, KYC laws were introduced in 2001 as part of the Patriot Act, which was passed after September 11, to provide a wide range of legal means to discourage or highlight potential terrorist behaviour. Nowadays, every legal and transparent financial product requires the verification of KYC.
Why introduce KYC? The aim of KYC is not to bother the client with bureaucracy and paperwork, but to prevent identity theft, money laundering, terrorist financing and financial fraud. A KYC check allows the company to learn more about its customers and manage risks accordingly.
KYC and AML: what is the difference? The concept of AML is much broader than KYC. AML stands for Anti-Money Laundering and refers to a series of policies, laws and regulations to combat income generation fraudulently. However, KYC and AML are connected. If a project follows the regulations of AML and KYC, it has a greater potential to initiate a successful collaboration with the banking sector. Why should they want to do it?
Many digital exchanges are struggling to obtain a bank account that simplifies global financial transactions. Banks, in turn, are struggling to rely on digital exchanges in terms of AML. It is important because it guarantees that the customer and the information provided by them are real.
KYC and digital exchanges At first glance, the idea of applying the KYC register contradicts one of the fundamental principles of the Crypto-world: anonymity. But if we go deeper, anonymity becomes a dangerous weapon in the wrong hands. In essence, the KYC process for exchanges and digital banks is the same.
It always requires a proof of identity (POI), a proof of address (POA) and other information relevant to the verification. However, the actual steps included in the process may be different. Cryptocurrency exchanges can request or accept different types of IDs, ask to sign different forms and include different procedures in general.
What happens if I don’t agree to provide the documents?
It’s easy If you refuse to provide any of the requested documents, you will not be able to buy, sell or exchange encryption with that bag. You must comply if you legitimately want to enter the cryptographic scene.
What documents do I need?
The most important documents that one may need for their verification is proof of address. The following documents are normally accepted as a type of prooffor the identity:
- Driver’s license;
- Identity card of voters
When it comes to proof of address, the documents that can be presented are as follows:
- Bill, for example, telephone bill, electricity bill, gas bill;
- Bank account statement with verification of the signature;
- Letter from the employer, banking director of the planned commercial banks.
Some problems with KYC
Checking the KYC status can slow down the registration process. Once registered for a digital exchange, it is necessary to provide the necessary documents and wait for them to be verified first. Until then, you can’t buy, sell or trade. Depending on how carefully you read the requirements, the verification process is fast or slow. It is important to check if you have all valid KYC documents.
Furthermore, it makes no sense to send an obsolete document because it will be rejected by the KYC team of the chosen exchange, and you will be asked to send it again. To save time and effort, we recommend that you always send the correct information as described in the policy.
Final remarks KYC is an incredible thing! The verification has a very, very important purpose and although it may take a long time, it is worth 100%! If you are interested in buying, selling or marketing Cryptos, choose a digital exchange that manages a KYC policy (like CoinMetro!), Read your policy and KYC requirements carefully, prepare all your documents to pass the verification in a single pass and safe trade!
Are there disputes regarding KYC?
Disputes over this legislation / regulation / policy include:
knowing your customer is a tremendously costly burden for companies operating in the financial sector, particularly for smaller finance companies, where compliance costs are disproportionately high . Customers may believe that the information requested is extremely intrusive and expensive.
Retirees who travel within their own country without having a permanent fixed address may also have a disproportionate disadvantage for the same reason. The jurisdictions of all the Americas, EMEA and Asia Pacific have indicated that all these jurisdictions allow a form of confidence in the customer information provided by third parties.
In many cases, this data is incorrect, potential customers of the bank may not be aware of the error and there is no claim procedure to correct or sanction the invalid data provider. Some citizens of other countries (Canada) are fighting against the excessive extension of the EE. UU To its sovereign banking system and have questioned the new law of the USA. UU In their court.
Laws regarding KYC of various countries.
the 2006 law on the financing of money laundering and counterterrorism (AML / CTF law) implements the KYC laws. The instrument of the regulation on the financing of money laundering and terrorism of 2007 provides guidelines for the application of the powers and requirements of the law.
Compliance is governed by the Australian Governmental Agency, Australia’s Transaction Analysis and Reporting Center, established in 1989, known as AUSTRAC.
Canada’s financial and transaction analysis center, also known as FINTRAC, was created in 2000 as a financial information unit for Canada. A pending lawsuit is pending in Canada to challenge the legality of the new legislation.
India: the Reserve Bank of India introduced the KYC guidelines for all banks in 2002. In 2004, the RBI ordered everything banks who make sure to comply with the KYC provisions before December 31, 2005.
the central bank of the country (Bank of Italy), which also exercises regulatory power for the financial industry, promulgated the requirements in 2007 and the KYC rules that financial institutions must respect in the Italian territory.
the law on information and the use of certain information on financial transactions regulates due diligence in the country.
Financial Intelligence Act, 2012 (Law No. 13 of 2012) published as Government Notice 299 in Official Gazette 5096 of December 14, 2012.
updated KYC laws were promulgated at the end of 2009 and they were signed in force in 2010. KYC is mandatory for all registered banks and financial institutions (the latter has a very broad meaning).
the Financial Intelligence Center Act 38 of 2001 (FICA) United Kingdom: the money laundering regulations of 2017 are the basic rules that govern KYC in the United Kingdom. Many companies in the United Kingdom use the guidelines provided by the European Money Laundering Steering Group together with the Financial Conduct Authority’s “Financial Crime: A Guide to Business” to help with compliance.
According to the Patriot Act which was released nearly on 2001, the Secretary of the Treasury needed to finalize the regulations before October 26, 2002, which makes KYC a compulsory factor for all US banks. The related processes must comply with the customer identification program (CIP)
Luxembourg: KYC is governed by the money laundering laws and regulations (AML), which came into force in 1993 and were last modified in 2015