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Full Form of KYC

Full Form of KYC

Know Your Customer

KYC Full Form is Know Your Customer. KYC is a term which is normally used in the investment industry including banks for customer identification. KYC was introduced by RBI (Reserve Bank of India) in order to prevent money laundering, financial fraud, identity theft, illegal transactions and terrorist financing through banks. The customer of a financial institution is expected to provide the details like his or her name, father’s name, mother’s name, date of birth, address, contact number, marital status, PAN card number etc. With this information, banks are able to identify customers and serve them in a better way.

Full Form of KYC

 

KYC Full Form – Additional Information

Know Your Customer, which will be hereinafter referred to as KYC throughout the article, refers to the verification process of business in which the identity (ID) of the clients is verified. KYC is often used in reference to bank regulations, which are responsible for the governance of such activities relating to verification. KYC processes are being employed by corporations of all kinds of sizes with the aim of ensuring that their proposed consultants, agents, or distributors show antibribery compliance.

 

Insurers, export creditors, and banks have now started demanding that their customers provide a comprehensive due diligence anti-corruptive information for the purpose of identification of integrity and probity. KYC is becoming increasingly popular both in India and aboard because it is one of the best as well as most effective methods against financial fraud, identity theft, terrorist financing, and money laundering, etc.

 

KYC is one of the most popular processes undertaken by business enterprises and therefore, holds great relevance. So, with the aim of understanding more about KYC, there are few things that everyone must about it. So, here are five points about Know Your Customer process that every person must know:

 

Standards of KYC

The primary purpose of KYC is the prevention of using banks with or without intention by criminals for the purposes of fraudulent transactions, money laundering, terrorist financing, etc. The process enables the banks and other enterprises to know about their customers better and also have a comprehensive account on their financial dealings. KYC, therefore, contributes to the reduction of risks.

 

The following are key ingredients in a typical KYC policy:


Typical controls under KYC policy

KYC undertakes many control measures on the customers and some of them have been mentioned below:

The banks are free to adopt whatever measures under KYC policy that adhere to the principles of the policy and at the same time help in reducing risk.

 

KYC Laws according to country

KYC policy undergoes variations from one jurisdiction to another. The laws on KYC might differ depending on the country concerned.


Enhanced Due Diligence

KYC places the Enhanced Due Diligence (abbreviated as EDD) standard for rich customers and transactions. In the United States, the EDD measures are applicable to different types of accounts such as Correspondent Account, Private Banking, and Offshore Banking Institutions. The standard of EDD differs from one jurisdiction to another because there is no set definition of the same.

Some of the characteristics of EDD are as follows:


Documents

On the official website of RBI, the KYC programme has been explained. Therein it has been stated that for the purposes of proof of identity as well as proof of address, the Union Government has notified 6 documents for the same, which include Aadhar Card, NREGA card, Passport, Voter’s Identity Card, Driving Licence, and PAN card. For the purposes of the KYC process, the customer is required to submit any of the aforementioned documents for proof of identity and address. In case the document submitted does not have details of address, then another document that has such detail is to be submitted.

 

KYC Full Form: Know Your Client

Full Form of KYC stands for Know Your Client. This is a standard form that provides investment advisors all information about the investment knowledge, risk tolerance and financial position of the customers. The purpose of KYC form is to protect both investment advisors and clients. Clients are benefited by making their advisor aware of what type of investment that suits them best, based on their financial situations.

 

On the other hand, KYC helps investment advisor to know what they can include in their customer portfolio.In simple terms, KYC helps businesses to verify client identities. It is often a process of bank regulations. And KYC is also employed by companies of varied sizes to ensure anti-bribery compliance of their consultants, distributors, and agents.

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