Know Your Customer (KYC)

Know Your Customer (KYC) is a term used to describe the process by which financial institutions verify the identity of their clients and assess their potential risks. The objective of KYC is to prevent money laundering, terrorist financing, fraud, and other illegal activities by ensuring that financial institutions have a clear understanding of who their clients are, what their sources of income and wealth are, and their reasons for conducting business. KYC requirements have become increasingly important in recent years due to global concerns about financial crime. KYC measures are also used to protect financial institutions from reputational and financial risks that may arise from being associated with illegal activities.