Know Your Customer, or KYC, can also mean Know Your Client.
KYC, also called KYC check, is the required process of finding out who a client is and making sure they are who they say they are when they open an account and regularly after that.
In other words, banks have to make sure that their customers really are who they say they are.If a client doesn’t meet minimum KYC requirements, the bank may refuse to start an account or end a business relationship.
How does the typical KYC process work?
Usually, a KYC process involves:
1. Making sure who the customer is to stop scams
2. Checking the customer’s name against a list of banned people
3. Looking at the customer’s risk profile to see if they pose a bigger risk.
4. Ongoing tracking to make sure the risk hasn’t changed
Customer due diligence:
Accountants are expected to make sure that new clients are who they claim to be by asking for proof of identity from the client. This is usually called “know your customer” or “customer due diligence” processes.
The business must be able to answer the following questions:
– Who is the client?
– Who owns/controls them?
– What do they do?
– What is their source of funds?
– Can you describe their activities?
– What will you be doing for them?
– What is its legal structure?
