What is KYC and how to pass it?

KYC (Know Your Customer) is a process used by financial institutions to identify and verify the identity of their customers. As part of KYC, clients provide documents proving their identity and place of residence. This procedure allows banks and other financial institutions to verify that the client is really who he claims to be, as well as to determine the degree of risk and possible fraudulent activities.

KYC helps financial institutions reduce the risks associated with money laundering, terrorist financing and other fraudulent activities. It also provides customer protection as it allows financial institutions to collect only necessary information about their customers and use it only for the right purposes.

KYC became widespread after the September 11, 2001 terrorist attacks, when it was discovered that some of the terrorists were using US bank accounts to fund their activities. As a result, the United States and many other countries have introduced legislative measures that require financial institutions to conduct KYC procedures.

Since then, KYC has become mandatory for banks and other financial institutions around the world. With the development of technology, KYC has become easier and faster thanks to electronic identification and biometric technologies.

Who needs KYC?

KYC procedures are carried out in various industries and business areas where verification of the client’s identity and compliance with legal requirements are required.

Overview of industries and business areas where KYC is required:

– banks and other financial institutions: Customers who open bank accounts or request loans must complete KYC. Banks must ensure that customers are not associated with fraudulent activities, terrorism or money laundering;

– Fintech companies that provide online payment, lending, investment, etc. services are also required to conduct KYC. This helps them ensure that customers are not using their services for fraudulent activities;

– Cryptocurrency exchanges must also conduct KYC to prevent the use of cryptocurrencies for terrorism financing and money laundering;

– other industries: KYC may be required in other industries where there is a high level of fraud risk, such as gambling, real estate and legal services.

How KYC is regulated?

KYC is a legal requirement in most countries. In the US, KYC is regulated by the US Bank Secrecy Act and the Patriot Act. In the European Union, KYC is governed by the requirements of the fifth EU Anti-Money Laundering and Financing of Terrorism Directive (5AMLD). In Ukraine, KYC is regulated by the Law “On Preventing and Combating the Legalization (Laundering) of Proceeds from Crime, the Financing of Terrorism and the Financing of Proliferation of Weapons of Mass Destruction”.

How to pass KYC?

The KYC procedure may vary slightly depending on the industry and company, but usually includes the following steps:

Collection of information: the client must provide personal information, including full name, residential address, date of birth, telephone number and email address. The client may also be required to provide scanned copies of documents confirming the identity and real address of residence.

Verification of information: the company checks the information provided to ensure that it is correct and meets KYC requirements.

Risk Assessment: The company conducts a risk assessment and determines if a client is high risk. If the client is considered high risk, then additional checks may be carried out before services are provided to the client.

Conclusion: after completion of all checks and evaluations, the company may decide to provide services to the client or refuse him.

When going through KYC, the following practical tips should be considered:

Prepare the required documents in advance: In order to pass KYC, you may need to provide scanned copies of documents such as a passport or driver’s license.

Make sure the information is correct: When providing personal information, make sure it is correct and consistent with the documents you provide.

Be prepared for additional checks: if you are considered a high-risk client, the company may carry out additional checks before providing services to you. Be prepared to provide additional documents and answer additional questions.

Be patient: KYC procedures may take some time, especially if you provide additional information or pass additional checks. Be understanding, the company conducts these procedures to comply with the law and protect its customers.

Ask for help: if you have any questions or problems with KYC, do not hesitate to contact the representatives of the company that conducts KYC procedures for help. They can help you understand the requirements and answer your questions.

White&Partners can help you pass KYC, as we have specialists who are familiar with the legislation governing KYC procedures, as well as experience in their implementation.

We can provide a range of KYC services, namely:

– prepare and submit all the necessary documents for passing KYC;

– correctly fill in all the necessary forms and provide the necessary information for passing KYC procedures;

– provide advice to clients on KYC requirements and help them understand the process.

– create a KYC policy that will comply with the requirements of the law and will allow for the efficient implementation of KYC procedures;

– conduct an audit of KYC procedures to make sure they are correct and comply with legal requirements.

Conclusion

KYC procedures have become an integral part of the business and financial industries, and their importance will only grow in the future. Properly completing KYC procedures can help companies legally use the services of banks, fintech companies, cryptocurrency exchanges, and other organizations that require KYC.

If you have any questions or need assistance in the field of KYC, please contact White&Partners. Our specialists will help you cope with any difficulties and guarantee the passage of KYC procedures in accordance with the requirements of the law.

Copyright ©2023 All rights reserved.