KYC FULL FORM | 2021 Update, Know Your Customer, EKYC

KYC FULL FORM

If you have been looking for KYC full form, then this article will give you the complete information about the KYC, what is KYC document, what is the use of KYC and more information related to the KYC.

KYC Full Form: Know Your Customer.

The full form of KYC is Know Your Customer. This Know Your Customer method is an important process for verifying the customer while doing connection or business with the company because to stop fraud and illegal activities from both side customer and companies. 

RBI has mandated companies who are using digital transactions while businesses, banks, and other financial institutions make sure KYC of their customers before using all their services. It helps the financial institutions serve you better.

In India, RBI made KYC rules for banks and other financial institutes. This system helps to protect our account and necessary details from illegal activities. 

What is the use of Know Your Customer ?

The KYC full form uses for verification of customer identification and address proof by the financial institutes. 

KYC is extremely important for both the bank or other financial institutions and therefore the customer because the necessary steps were taken during KYC to make sure that the customer is genuine, and there’s no risk.

Under the KYC process, ID card verification, document verification, and face verification of a person are done, thereby authenticating the customer and therefore the information given by him.

The banking process has become very secure today thanks to KYC, and RBI has made it necessary for all banks to stay updating their customers on KYC on, regular basis.

In many cases when the bank didn’t update the KYC of the purchasers, an important penalty was imposed on them by the RBI.

List of Know Your Customer documents:

• Aadhar card
• Pan card
• Driving license
• Voter identity card
• NREGA Card
• Ration card
• Letter of the national population register

The customer can give one of the above documents for KYC verification and if the person has only an aadhar card then also KYC can be done.

Importance of Know Your Customer:

• KYC helps people avoid many types of fraud in banking.
• Due to KYC, the government and RBI can easily monitor all types of banking transactions or digital transactions.
• KYC helps the government to stop money laundering.
• KYC has reduced funding for terrorism.

Know Your Customer include the following details:

• Customer Name
• Date of Birth
• Father’s Name
• Mother’s Name
• Marital Status
• Address Proof
• Identity Proof
• Contact No.
• PAN Card
• Source of the Funds

Types of Know Your Customer :

They are two types of KYC process:

Aadhar card-based KYC:

This is a verification process that will be administered online and is therefore hassle-free and convenient. Customers will need to upload a scanned copy of their Aadhaar card for verification. This process is additionally referred to as eKYC.

In-person KYC:

Another option for KYC verification is through in-person interaction wherein the customer will need to visit the closest branch of the financial organization or KYC kiosk and authenticate their identity. In certain circumstances, a KYC registration executive also can visit the customer for verification.

What are the difference between AMC and Know Your Customer?

Anti-money laundering (AML) may be a broader and more holistic practice than KYC. AML compliance is that the comprehensive set of policies that a corporation uses to guard against criminal infiltration, concealment, terrorism financing, human trafficking and more. KYC is a crucial a part of AML for companies, banks, fintechs, and other financial institutions.

Know your customer (KYC) is that the regulatory process during which a financial organization verifies a customer’s identity by assessing their credentials before allowing them to use a service. KYC policies allow financial companies to understand about their customers and their customers’ financial dealings, which helps to effectively to understand and manage risks.

Components of Know Your Customer:

The first component of a KYC compliance policy is that the customer identification program (CIP). CIP was imposed under the USA Patriot Act in 2001 to raised protect the world’s financial institute systems in response to the 9/11 attacks. The Patriot Act made it mandatory for all banks to implement written CIPs supported the bank’s size and its customer base. The act also required all banks to implement CIPs into their larger AML policies. CIPs verify the customer’s identity using credentials like their name, date of birth, address, Social Security number or other documents. Understand the role of customer screening within the modern FinTech climate.

The second component of the KYC compliance policy is customer due diligence (CDD). CDD may be a KYC process during which all the information are collected from the customer’s to verify their identity and evaluate their risk profile. it’s weakened into two separate tiers: simplified due diligence (SDD) and enhanced due diligence (EDD). SDD is employed for accounts at low risk for concealment or terrorism funding, like standard bank accounts or low-value bank accounts.

EDD is employed for patrons that are at a better risk of infiltration, terrorism financing or concealment. If a customer is decided to be a better risk, additional information collection is important. EDD procedures also include transaction monitoring. It’s important to stay track of the standard amount and frequency of a customer’s transactions to raised find irregularities. it’s the financial institution’s responsibility to work out each customer’s risk profile to work out if SDD or EDD is important. See how we help the ROI with advanced CDD solutions for protection.

The third component of KYC policy is continuous monitoring. Checking a customer once isn’t sufficient to make sure security. Understanding a customer’s typical account activity and monitoring the activity is important to catch irregular activities and reduce the risks.

How Know Your Customer related to the AML?

A company’s AML compliance program has many steps, and KYC is that the primary one. KYC is that the method used to verify a client’s identity and understand their risk profile, but there are more steps necessary to completely protect against financial crimes.

A complete AML compliance program includes KYC procedure as a first step to verify a customer’s information is correct, manage their risk factors, and continuously monitor their accounts to prevent the risks. KYC is that the foremost vital step in an institution’s AML policy. It’s important to verify a customer’s identity, assess their risk, understand a customer’s general financial habits, and activities have the specified procedures in place to catch abnormalities activities. Strong AML compliance policies allow companies to easily find and reduce the risks as they arise.

FAQs Related to the KYC full form:

Conclusion of KYC full form:

We hope you are understood the KYC full form and KYC use for the verification of a person in the financial institution to stop fraud or illegal activities. Nowadays it is mandatory for all institutes for verification of process by KYC full form from the RBI. 

Other Full Form of KYC:

IMPS Full Form

NEFT Full Form

ECS Full Form