Know Your Customer (KYC)

“Know Your Customer” is a systematic business process of conducting due diligence checks on a potential customer before deciding whether to do business with the party at all.

Different companies in different industries can apply different standards to KYC.

In the lending industry, checks on borrowers might include:

  • Identity verification
  • Source of funds
  • Individual being a Director in which companies
  • Individual being a shareholder in which companies
  • Outstanding lawsuits
  • Political exposure
  • etc

Among many, financial institutions, banks, and insurers take KYC very seriously as part of their risk management policies.

This is for the prevention of doing business with criminals, unlawful syndicates, terrorists, money laundering, and basically high risk individual and entities.