What is "Know Your Customer?"

What is “Know Your Customer” (KYC) and Why Does It Matter?

KYC, or “Know Your Customer,” is a vital process used by financial institutions to verify customer identities and assess potential risks. Mandated under the PATRIOT Act’s Title 3, KYC ensures compliance with anti-money laundering (AML) and counter-terrorism financing regulations. It consists of two key components: the Customer Identification Program (CIP) and Customer Due Diligence (CDD).

To meet KYC requirements, customers typically provide proof of identity (e.g., government-issued ID, passport) and address, along with advanced verification methods like facial recognition or biometric data. These measures help prevent fraud, detect suspicious activity, and reduce risks associated with money laundering and terrorism financing.

KYC isn’t just about compliance; it’s about building trust and maintaining the integrity of financial systems. Financial institutions that implement strong KYC protocols protect themselves, their customers, and the global financial ecosystem.
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