Understanding “Know Your Customer” (KYC) and Turning it into a Practice for Your Business

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In today’s digital age, with financial transactions happening at the click of a button, ensuring the authenticity and security of these transactions has never been more crucial. Enter “Know Your Customer” or KYC, a pivotal process in the world of data designed to combat fraud, money laundering, and other illicit activities.

What is KYC?

“Know Your Customer” (KYC) is a regulatory and legal framework different businesses can adopt. Its primary objective is to verify the identity of its clients. Doing so aims to ensure that the services provided are not misused and that institutions are not inadvertently aiding illicit activities.

Critical Components of KYC:

  1. Customer Identification Program (CIP): This involves obtaining essential details depending on whether the customer is a company or an individual.
  2. Customer Due Diligence (CDD): A deeper dive into a customer’s credentials to confirm their identity, that they are whom they say they are, assess their risk profile or how they conduct business.
  3. Enhanced Due Diligence (EDD): For high-risk or questionable customers, this step involves collecting additional information to understand the potential risks associated with them or doing business with them.

How can I be compliant with KYC?

Imagine that your company deals in data, and you sell or transfer information to your vendors or partners. This happens in many industries, including healthcare, call centers, insurance, etc. After the transfer is made, how do you know they treat the data respectfully? Do you know your customers and how they treat that data? With Assumed you can! Before getting the data over to them, implant a decoy contact into the list for each vendor or partner. If you start receiving 200 emails and 50 calls from one of your customers in a week, you will know! Assumed allows you to know who would be shady to work with or if you have to discuss how your vendors or partners treat the data. 

Why is KYC important?

KYC is not just a regulatory requirement; it’s a shield against potential threats. By understanding who their customers are, institutions can better detect and prevent suspicious activities, ensuring the safety and integrity of the business and its clients.

The broader impact

In conclusion, KYC is more than just a process; it’s a commitment to maintaining your business’ integrity. As technology and data laws continue to evolve, so will the methods and means of KYC, ensuring a safer digital future for all.