Definition
KYC (Know Your Customer) is a regulatory process that verifies the identity of customers and merchants to prevent fraud, money laundering, and ensure safe financial transactions.
How this works
KYC involves collecting and verifying personal details, ID proofs, and sometimes biometric data. Businesses submit this information to banks or payment providers, who validate it against official records before allowing account or payment access.
Benefits
• Prevents fraud, identity theft, and financial crime
• Ensures regulatory compliance
• Builds trust between businesses and customers
• Enables secure transactions and account management
• Facilitates risk assessment and monitoring
FAQs
Q1. Why is KYC important?
KYC is critical to prevent fraud, money laundering, and to ensure secure and legal financial transactions.
Q2. What documents are required for KYC?
Typically, government-issued ID, address proof, and sometimes photographs or biometric data are required.
Q3. Is KYC mandatory for all financial services?
Yes. Banks, payment gateways, and financial institutions are legally required to perform KYC.
Q4. How often should KYC be updated?
KYC should be updated periodically as per regulatory guidelines or when customer details change.