Understanding KYC (Know Your Customer)

In this lesson, Jeff will be walking you through today a definition and a history of KYC (Know Your Customer).

KYC checks are crucial for accurately understanding who you're working with, whether they're individuals or businesses. If you're unfamiliar, know your customer checks are things that are generally done to have a better and accurate understanding of who you are working with, whether they be an individual or a business, especially in the States, you will usually hear KYC checks related to the Bank Secrecy Act, which came out in the 1970s.

These checks are primarily aimed at preventing money laundering (AML - Anti-Money Laundering).

Global Implications of KYC

Online businesses operating globally need to be particularly aware of KYC. The location and operation areas of a business can influence KYC requirements. As a global entity, a business might need to comply with multiple jurisdictions and regulatory regimes.

eKYC - Digital Transformation of KYC

Historical Perspective: In the 1970s, KYC involved more paper-based processes, often requiring physical presence at a bank. Modern Approach: As of 2023, many KYC processes are digitized, allowing checks via apps on phones or laptops. The essence of KYC remains the same, but the medium has shifted to digital platforms.

Compliance and Customer Onboarding

Businesses must ensure they are onboarding legitimate customers and not those with fraudulent intentions. Digital KYC processes involve verifying names, addresses, and other essential information to comply with AML regulations.