Financial Services
KYC
KYC, or Know Your Customer, is the set of processes a financial institution uses to identify customers and understand relevant identity and risk information.
KYC, or Know Your Customer, is the set of processes a financial institution uses to identify customers and understand relevant identity and risk information.
What KYC means
KYC, or Know Your Customer, is the set of processes a financial institution uses to identify customers and understand relevant identity and risk information.
KYC is broader than collecting a name and address. Depending on the institution and account, it can include a Customer Identification Program, identity verification, beneficial ownership, sanctions or risk screening, expected activity, and ongoing review. The exact program follows applicable law and institutional policy.
How it works
The account workflowWorkflowA workflow is a defined sequence of steps, decisions, actions, delays, and outcomes used to complete a business process. obtains required identifying information, uses documentary or non-documentary verification methods, records results, and routes exceptions. Risk information and later activity may triggerTriggerA trigger is an event or condition that starts, resumes, changes, or stops an automated workflow. additional review. Sensitive data should move only through approved systems and access paths.
Practical use cases
Collecting account-opening identity information
Routing a failed verification to qualified staff
Passing approved data to an identity-verification service
Do not present KYC as one universal checklist. The institution owns the risk program, approved data, verification methods, exception handling, and final decision.
Frequently asked questions
Why does KYC matter?
Do not present KYC as one universal checklist. The institution owns the risk program, approved data, verification methods, exception handling, and final decision.
Is KYC the same as identity verification?
Identity verification is a core component, but KYC may also include customer risk, beneficial ownership, purpose, expected activity, and ongoing monitoring.
Source: FFIEC Customer Identification Program guidance.
Related concepts: account openingAccount openingAccount opening is the process of collecting, verifying, reviewing, and approving the information required to establish a financial account., piiPersonally Identifiable Information (PII)Personally identifiable information, or PII, is information that can distinguish or trace an individual’s identity alone or when combined with linked data., eligibilityEligibilityEligibility is the set of conditions that determines whether a prospect can move to a service, quote, appointment, application, or specialist., escalationEscalationEscalation moves a conversation to a person, specialist, supervisor, or alternate workflow when the agent should not continue alone..