Know your Customer (KYC) – Powerful way of Customers Identification

In this contemporary age, scammers and criminal groups have several ways to attain their vigorous purpose. So businesses need to secure their clients’ identities more efficiently. Unexceptional activities by criminal groups misuse the systems of authorized entities like banks and financial institutions for their benefits and convert black money into white money. Hence, financial institutions depend upon the systems like Know your Customer (KYC) for the security of their clients.

KYC is playing its mandatory role in the establishment of trustworthy financial institutions. It is providing dynamic security from risks and saving authorized entities from loopholes. It provides a proactive verification service to each customer individually and saves them from data breaching, account takeover frauds, identity thefts, and terrorist financing. 

Enormous numbers of fraudulent activities are taking place on online platforms. So for the security from such scams banks and online businesses – restricted from performing KYC while onboarding their clients. In the past KYC, used by financial institutions but now many other institutes like fintech regulations are also utilizing this system Know your Customer (KYC) Rule for the data security of their clients.

KYC Identification Process

KYC is a procedure to determine customers’ Identity. Some steps given below to process the clients’ verification.

  • The first step of identification includes full details and information of the customer. So the online user has to submit his personal information while enrolling himself. 
  • The second step, after the collection of whole information, identity evidence is required from the end user to prove his identity for further authentication.
  • Third step when a user uploads his document, they are further checked respectively. So it is confirm that the documents are fully authentic, not tampered nor photoshopped or edited. Once it is endorsed, the data is extracted.

Two steps of KYC Verification

There are two steps of KYC authentication given below.

  • (CIP) Customer Identification Program
  • (CDD) Customer Due Diligence

Customer Identification Program (CIP)

CIP is the first step of KYC for the prevention of fraud, money laundering, and illegal activities. The direction of CIP ensures the verification of financial transactions to mitigate the fraud risks. In the Customer Identification Program financial institutions collect the information of the client while opening their account that contains;

  • Name 
  • Address
  • Date of birth
  • Identification number 

Customer Due Diligence (CDD)

The 2nd step of KYC is screening the documents given by clients. But the data covers in CDD is;

  • Name 
  • Address
  • Age 
  • Date of birth

All this information is essential for account opening of the clients in which they restrain the customer, whether he is in PEP lists or not. Hence, this ensures that the customer is not a risk for the organization. 

Advantages of real time KYC compliance

There are many advantages of KYC compliance such as;

  • KYC real time compliance provides accurate results
  • Another one is – KYC rule – provides global coverage from scams and prevent from risks
  1. The last – KYC meaning is a real time compliance which provides outcomes in less than 30 seconds.

Know your Customer (KYC) Rules

  • The Banking secrecy act (BSA) of the USA requires financial institutions to take essential steps for the security of customers and report scam cases to FinCen (Financial Crimes Enforcement Network)
  • The Anti Money Laundering Act (AMLA) of France considers Identity Verification compulsory for financial institutions

Worldwide Authorities for KYC 

The main authorities established:

  • FATF (Financial Action Task Force) is a world wide authority that assembles and analyzes such as terrorist financing data and money laundering.
  • FinCEN (Financial Crimes Enforcement Network) is a USA based treasury department bureau that collects financial transactions and utilizes it for financial crime.
  • A Canadian authorized sector – FINTRAC (Financial Transactions and Report Analysis Center) extracts and analyses the financial crime data through KYC.
  • Europol is an European based organization that works on anti-money laundering and financial crimes.

Organizations using KYC Regulations

However, a wide range of business entities are using KYC regulations globally which are:

  • Financial industries like banks, insurance companies and mortgage houses
  • Fintech companies like crypro companies, online payment solutions, digital loan providers
  • Real estate sectors
  • Healthcare industries like hospitals, drug providers, POM sellers and care providers
  • Legal sectors
  • Valuable art and metal dealers
  • Gaming industries like gaming platforms and lotery businesses


Therefore, KYC solution is an efficient system and a need of every business sector. Organizations follow all steps of KYC compliance adequately for the verification of customers to prevent systems from frauds and scams. Hence this takes less than thirty seconds for identity verification of customers. Therefore, every business can use this efficiently.

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