Looking for KYC (Know Your Customer) full form and information. Why KYC is used in Banking? why it is important? So, all about KYC, I gonna share with you in this article. If we talk about KYC, It is getting all the information about customers in the Banking sector. So, be connected with us Here I gonna share with you some amazing facts about KYC which you don’t know.
KYC is a procedure used by financial organizations to check the legitimacy of their customers by confirming their identity and address before to or during the transaction.
The major goal of the KYC procedure at banks is to prevent people from using their accounts to engage in unlawful financial activities like money laundering.
Let’s continue with a definition of KYC, then look at how enhanced ID verification technologies can help KYC processes run more smoothly.
What is KYC? Why it is Important?
KYC stands for “Know Your Customer” or “Know Your Client” in some cases. kyc full form is “Know your Customer”.
KYC (Know Your Customer) is the process of identifying and validating a client’s identification when they open an account and on a regular basis thereafter.
In other words, banks must verify that their customers are who they say they are.
If a client fails to meet minimal KYC criteria, banks may refuse to open an account or terminate a business relationship.
KYC is a necessary step in preventing unlawful financial transactions. This procedure also protects financial institutions from being utilized for money laundering without their consent.
Besides that, one can check the validity of banking firms or persons.
KYC types
Especially kyc can be verified with two types. KYC
KYC with Adhar: It’s also a verification process that can be completed online, making it simple and convenient. For verification, customers must provide a scanned copy of their Aadhaar card. KYC stands for electronic know-your-customer.
KYC with In-Person: KYC verification is done by in-person rapport, which requires the customer to visit the financial institution’s nearest branch or a KYC kiosk to verify their identification. A KYC registration executive may also visit the consumer for verification in specific instances.
Why KYC Process is important in Banking?
- Bank-defined KYC procedures include all steps necessary to verify that their customers are real, as well as assess and manage risks.
- These client onboarding procedures aid in the detection and prevention of money laundering, terrorism financing, and other forms of illicit corruption.
- ID card verification, face verification, document verification (such as utility bills as evidence of address), and biometric verification are all part of the KYC procedure.
- To prevent fraud, banks must adhere to KYC and anti-money laundering requirements. The banks are responsible for KYC compliance.
As per the United Nations, criminals launder between $1.6 and $4 trillion each year (about 2 to 5% of world GDP). Stricter KYC/CDD procedures are assisting in the prevention of this.
KYC Documents
KYC documents are documents that can be used to verify an individual’s or bank’s identity and address. While the Id Card and PAN Card are the most commonly requested documents, other documents can be utilized for KYC verification at various financial institutions. These are a few of them:
Customer identification KYC checks are conducted using documents, data, or information from a reputable and independent source. Each client is asked to submit identification and address proof.
Identity Proof:
- Validity of Aadhaar Card
- PAN Card
- Validity of Indian Passport
- Valid Driver’s License or
- Voter ID
Address Proof:
- Utility Bills (Electricity, Water, Gas)
- Valid Voter ID
- Valid Indian Passport
- Aadhaar Card
- Valid Driver’s License
What is eKYC? Why it is Popular in India?
Digital KYC (Know Your Customer), also known as eKYC in India, is a process in which a customer’s identity and address are electronically confirmed using Aadhaar authentication. India’s nationwide biometric eID scheme is known as Aadhaar.
It’s because in the country, 99 percent of the adult population possesses a digital identity. Aadhaar numbers were distributed to 1,29 billion people in 2021.
KYC, as a true due diligence operation, involves:
- Identification of the customer
- Any beneficial owner must be identified.
- Verification of a customer’s identity using documents, data, or information obtained from a trustworthy and independent source.
- Information about the purpose and nature of the customer’s business relationship with the bank or financial institution is analysed and evaluated.
Conclusion:
KYC is a crucial step in ensuring the legitimacy of all financial transactions and purchases, as well as preventing financial fraud, black money, and financial fraud. The procedure is really simple and quick, and it is required by government rules. So, I think you have much more information about the kyc full form in detail.