2 best KYC full form in bank.

 

Introduction-

KYC full form in bank- Today we discuss the KYC full form in bank. What is the KYC full form in bank?

KYC full form in bank.

KYC full form in bank is Know Your Customer or Know Your Client.

So far you get to know the KYC full form in bank. Now we discuss the KYC in the context of KYC full form in bank. Know your customer is very significant. It helps to fight against financial crime like money laundering. It also helps the identification of the customer to give them better service.

The global anti-money laundering and financial terrorism is a big threat to the world economy.

KYC check is a mandatory process of identifying and verifying the particular customer or client when a financial institution is giving any services.

This KYC or customer identification is mandatory during the account opening. 

Usually in our countries like India bank and insurance companies or any financial institutions refuse to open an account without KYC. 

Why the KYC is important?

KYC processes defined by banks or any financial institutions are involved in all necessary actions to make sure that their customers are real human and genuine. They also confirmed their customer’s name, age and address. It helps to monitor the risk factor.

KYC process helps to-

  1. Identifying money laundering.
  2. Protects against financial terrorism.
  3. Prevents illegal corruption schemes.

To create an effective KYC programme requires the following elements in any financial institutions:

 1. Customer Identification Programme(CIP)-

How do you know someone is what he is stating that he is? After all, identity theft is widespread, affecting over 16.7 million US consumers. For obliged entities, such as financial institutions, it’s more than a financial risk – it’s the law.

to limit money laundering, terrorism funding, corruption and other illegal activities. Other jurisdictions have similar provisions; over 190 jurisdictions around the world have committed to recommendations from the Financial Action Task Force (FATF), a pan-government organization designed to fight money laundering. These recommendations include identity verification procedures.

In the US, the CIP mandates that any individual conducting financial transactions needs to have their identity verified. Provisioned in the Patriot Act, the CIP is designed to limit money laundering, terrorism funding, corruption and other illegal activities.

The minimum requirement to open an account in any financial institution is-

  • name 
  • Date of Birth
  • Address and
  •  
  • Identification number etc.

and while opening an account the institution must verify this information within a reasonable time.

Proof of identification must have to be verified by the institution. Proof of identification can be self-attested xerox copy of aadhar card, voter ID card, passport, driving licence, etc must be included.

The exact policies depend on the risk-based approach of the institution and may consider factors such as:

  • The types of accounts offered by the bank
  • The bank’s methods of opening accounts
  • The types of identifying information available
  • The bank’s size, location, and customer base, including the types of products and services used by customers in different geographic locations.

2.Customer Due Diligence: 

For any financial institution, one of the first analysis made is to determine if you can trust a potential client. You need to make sure a potential customer is trustworthy; customer due diligence (CDD) is a critical element of effectively managing your risks and protecting yourself against criminals.

3. Ongoing Monitoring- 

It’s not enough to just check your customer once, you need to have a program to monitor your customer on an ongoing basis. The ongoing monitoring function includes oversight of financial transactions and accounts based on thresholds developed as part of a customer’s risk profile.

Challenges of traditional KYC process-

The challenges faced by traditional KYC in a digitizing economy go beyond identification of fraudulent practices by applicants. Banks and other lending companies often invest heavily in conducting customer verification. It involves professionals, documentation costs, and hiring third-party agents who organize in-person visits to verify the identity of applicants.

Several small-scale lending institutions find it challenging to reach out to a wider customer base, possibly in rural and remote areas. In this scenario, a solution that saves time, effort and manpower hours in the verification process were needed to increase customer inclusion. A lengthy KYC procedure has also historically resulted in longer lending decisions by BFSI players ranging from large banks to local NBFCs.

eKYC-

In India, Electronic Know Your Customer or Electronic Know your Client or eKYC is a process wherein the customer’s identity and address are verified electronically through Aadhaar authentication. Aadhaar is India’s national biometric eID scheme.

Video KYC-

A new KYC process has been adopted by the financial institutions that are video KYC. Nowadays RBI allows video KYC now.  

 

 

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