What is KYC (Know Your Customer)?
The KYC Process Undertaken by Banks & Financial Institutions
The KYC Processes
- Simplified Due Diligence ("SDD"): this is the most appropriate for low-level risk clients or low-value accounts.
- Basic Customer Due Diligence ("CDD"): this level of due diligence screening applies to all clients.
- Enhanced Due Diligence ("EDD"): clients at this level are high-risk, which requires the collection of additional information to provide greater understanding.
The Importance of KYC in Banking
Money earned from illegal actions is often repurposed for terrorist funding or to support other criminal activities. Because of this, it becomes a threat to national security.
Implementing KYC within your risk mitigation strategy creates a standardised and simplified process for onboarding new clients.
You avoid facing expensive penalties due to non compliance.
Customers that have successfully gone through the KYC process are more trustworthy.