Don’t be! Submitting your Know Your Customer (KYC) documentation helps you ensure that no one else apart from you can access your bank or financial institution assets and exploit them. It also helps your bank protect you from identity theft and financial fraud. Banks and other financial institutions have increased the call for customer identification documentation when opening accounts and executing transactions. These identification documentations may include; an identity
document, a pay-slip and proof of residence, at minimum.
This process necessitates the ‘Know Your Customer’ (KYC) principle that is implemented by financial institutions and other companies that provide a financial service to know and understand the people that use their products and systems as well as verify the identity of clients to make sure that they are not involved with money-laundering or any other types of financial crime.
WHAT IS KYC?
Know Your Customer (KYC): Is a term used to describe how a business or financial institution identifies and verifies the identity of a client. The KYC principle emanates from international standards and legislation aimed at fighting against money laundering and financing of terrorism.
Money laundering is how criminals ‘clean’ the money they make from illegal activities such as fraud, drug trafficking and tax evasion. They launder money so that it looks like it comes from a legitimate source, to cover their tracks and avoid being detected. They then spend the money or use it to fund their criminal activities and lifestyles. People who finance terrorism also use these methods to send money to violent causes and to disguise who is providing and receiving the money.
WHY IS KYC IMPORTANT FOR YOU?
KYC lets the bank know its customers like you better, manage risks on your behalf and provide you with better, more efficient services. KYC also controls and manages what the banks do for you in ensuring that your finances are safe. It helps financial institutions update your customer profile and advise you on the best products for your type of profile to protect you and the financial system from exploitation by criminals. In essence, KYC is a must! Both for your financial safety and your bank.
WHY IS KYC IMPORTANT FOR BANKS AND OTHER FINANCIAL SERVICES
Any business that provides financial services needs to put systems and processes in place to stop criminals from trying to exploit them, and detect suspicious financial activities if they occur. This helps them manage their risks prudently. A financial institution may ask customers to confirm their identity. In some circumstances financial institutions may also ask for information about where money came from and other people who will benefit from the funds. Some customers may be asked to confirm their KYC documents more often than others because of the type of products that they access, making their profile high risk.
WHAT IS MY ROLE AS A BANK OR FINANCIAL SERVICE CUSTOMER?
Customers are expected to comply with financial institutions. Customers are advised to update their identification and verification (KYC) information whenever one or all of the following happens:
· Change of employment,
· Addition of sources of income,
· Change of residential address and
· Changes in personal identity (citizenship or change of marital
WHAT IF I DO NOT COMPLY WITH KYC?
Banks and other financial institutions may freeze accounts for customers who do not submit their KYC documents. This is because they are required by law to do KYC due diligence. Failure to submit your KYC documents is a criminal offence. A financial institution that continues to allow customers who have not updated their KYC documents also commits a criminal offence by doing so. Bank and other financial institution customers must update their KYC document requirements and enjoy the peace that comes with it.
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