Knowledge base

KYC (Know Your Customer)

Sep 05, 2022

What is KYC?

KYC (Know Your Customer) refers to the standard process of verifying a customer’s identity and evaluating their risk profiles while building a business relationship. An important pillar of Anti-Money Laundering regulations in any country, KYC plays an important role in protecting the interests of an organization by safeguarding against money laundering and other financial crimes.

The KYC procedure varies according to the industry of an organization, for example, the KYC for an online delivery platform would greatly differ from that of a banking firm, mainly because of the difference in the risk potential in both these cases.

What is the KYC process?

The first step in the KYC process is the Customer Identification Program (CIP) which refers to identifying and verifying the identity of the customer, using documents such as a passport, driving license, and financial statements. CIP is essential for banking services, because of government mandates that require to identify and verify the details of every account holder. 

Customer Due Diligence (CDD) is the next step of the KYC process. This refers to evaluating the customers’ information in order to determine their risk potential. Proper analysis of risk potential is essential while complying with AML guidelines and also guarding the financial institution against financial fraud. Once a customer has been onboarded, it is necessary to have an ongoing screening procedure in place. This continuous monitoring helps banking services to keep track of their customers’ transactional behavior and identify suspicious activities.

What are the documents required for KYC?

The documents required for KYC vary according to a country’s regulatory requirements along with a specific bank’s regulatory body. In general, a government-issued identity document and a separate document that shows the address proof of an individual are considered to be valid identification documents.

How does KYC protect you from financial fraud?

KYC is a mandatory procedure in many regions and plays an important role in an organization’s AML compliance program. Some key benefits of KYC are:

  1. Prevents financial fraud caused by identity theft.
  2. KYC’s risk-based approach helps banks and financial institutions discern changes in a customer’s usual financial behaviour, making it easy to spot fraud.
  3. A decrease in money laundering activities helps bring stability to a country’s economy.

What makes up uqudo’s KYC process?

uqudo’s dynamic KYC solutions offer rapid verification and minimize risk with unparalleled document reading accuracy.

  1. AI document screening: Our full-fledged AI document scanner can read and extract data in 98 different languages within milliseconds.
  2. Document verification: With real-time document verification, we can verify identity documents from 248 countries in milliseconds, along with identifying whether an individual is real through our government repositories.
  3. Face verification: uqudo’s liveness-based facial verification can verify if the user’s document matches the individual’s face using a selfie which helps protect banks and financial institutions from stolen identities.
  4. Enhanced Due Diligence: With customers having a higher risk potential, it is necessary that due diligence is maintained while verifying their bank accounts. Our credit check feature can access global credit risk insights that use real-time bank data.