Know your customer (KYC) is a commonly known term in banks and financial institutions and refers to the procedure of customer identity verification when involving organizations with them. Digital payment service providers, banks, or financial institutions are required by financial institutions norms to have clients know your customer procedure completed before allowing them to fulfill access to all services.
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Know your customer verification procedure is deemed vital to reduce illegitimate activities such as money laundering, corruption, or bribery. It aids authorities and organizations to keep track of client activities and detect criminals beforehand. Apart from a legitimate perspective, performing know your customer also aids organizations to keep criminals out of their systems.
Why is Know your Customer (KYC) important?
Know your customer aids bankers to make sure the app and other identity delegations provided by the users are original. Owing to instances like money laundering and drawing off money from bank accounts, verifying the identity of a client is vital to prevent fraud.
Know your customer has been in use for many years now and all clients have to obey and know your customer regulations. Without know your customer compliance, it is not possible to open a bank account.
Therefore, financial institutions have been practicing manual know your customer, which requires a lot of human verification as well since the risk of human errors is always present. Undesired errors in such processes could lead to great monetary loss to the organizations. Financial institutions such as banks have to adopt a better approach to know your customer verification.
By inquiring about automotive systems, organizations can onboard and secure clients too in real-time. The monotonous process of manual onboarding sometimes results in losing legitimate clients or customers.