How Know Your Customer (KYC) Is Helping Banking & Financial Institutions?

Money laundering has been one of the major activities of terrorist organizations that called for strictest measures from regulatory authorities in different countries. KYC or Know Your Customer form fill-up is a quintessential step for bank A/C holders these days. Hidden identities and lack of credibility do more harm to the banking and non-banking financial institutions in the long-term. With terrorism and financial crimes having interrelated connections, the critical aspect of collecting high-quality data only help. This is the primary reason why Know Your Customer (KYC) has become a primary activity in banks and financial institutions for verifying identities, checking credibility, legal validity, authenticity, and potential risks of customers. Lack of KYC reforms in several financial institutions has cost businesses huge. However, a certain section of these institutions has also classically failed in applying stringent control and management. This is the reason why major regulatory bodies perform regular audits of banking and non-banking organizations to discover loopholes and stop them with a proactive approach. Businesses too can follow Know Your Counterpart policy for identifying and flagging illegitimate customers, suppliers, employees, partners, providers, clients, etc. With the advent of technology, this activity has become useful to different trading communities without indulging in complicated operations. People are likely to finish off their trade with doubtful partners in the line than facing administrative penalties or public ramifications. Also, it gives an opportunity to strengthen the reputation of a business in the market. A trade-compliant business earns a phenomenal status in the public.