What is KYC? Know Your Customer?

Hello. My name is Faisal Khan, I’m a banking and a payments consultant.

The question for today is what is KYC. Very simple, KYC is an acronym that stands for: Know Your Customer. KYC basically means Who is your customer? If let’s say the customer is Faisal Khan and I’m signing up. How would the financial institution know that it’s me. Well I can provide my name. I can provide my date of birth. I could provide my address, my social security number. I could upload a document, a registry document like a passport or the national I.D. card or even a driver’s license. And in addition, I could complement it with accessing and providing access to my bank account. But by providing a maybe a utility bill copy that has my name and my address on it. All of this information. Will be studied and correlated together to form what is called a KYC profile of me. Then the bank or financial institution can say with a lot of certainty, yes this person is Faisal Khan.

This person is who he or she says they are based on the information supplied. So KYC, very simply, is the means of understanding and identifying who the customer is. And the means and the ways of that we use to identify is by providing externally issued documentation that is considered the norm.

A password is considered a norm, a driver’s license is considered a norm in many places and utilizing those and sometimes even so much so as querying those databases to check if the answer is indeed, you know for example the name of the passport matches the name of the person who supplied the passport. So KYC is know your customer.

I hope I’ve been able to answer this question if you have any more please feel free to ask in the comments section below. Till next time. Have a good one.

This page was last updated on September 1, 2022.

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