What is the benefit of a customer using KYC?
KYC and AML are regulations that require businesses to verify their customers’ identities.
KYC stands for Know Your Customer, but it’s also known as customer due diligence, know your client, or simply identity verification.
At its heart, KYC involves verifying current or prospective customers’ identities so you understand who you’re interacting with. You can think of it as doing a mini background check before doing business with a customer. Note: a customer can be an individual or a business, though KYC for businesses is often called corporate KYC or Know Your Business (KYB).
Why should I care about KYC?
3 main reasons are:
- It can protect your customers and help you build trust.
While identity verification can add some friction to your onboarding process, customers may appreciate that you’re taking steps to secure their account, vet your marketplace, protect them from account takeovers and other types of identity theft, and more.
2. It can help reduce fraud and financial crimes.
While KYC processes won’t eliminate fraud completely, knowing who your customers are can help you weed out bad actors and ultimately limit crimes that can spawn from fraud, such as money laundering and terrorism funding.
3. It’s often required.
In some industries, you need a KYC program to meet compliance requirements. If you don’t comply with KYC/AML laws, you could be fined or even imprisoned. In fact, companies were fined almost $1 billion for non-compliance in the first half of 2021 alone.
This is a pretty good article about it: Persona Blog: Industry News, Product Updates, and More