Why Know Your Customer Is Important And Part of Which Risk Analysis

We found the grueling sessions on topics discussed on the Internet. Henceforth, we picked quite an important one to fit the notion of today’s scenario in the banking & NBFC sector. Let’s take some points here to move forward.

The important of all knowledge is KYC or Know Your Customer for any business across industry verticals, which includes banking & finance, insurance, defense, IT consultancy, etc. How does it pan out in current scenario and geopolitical atmosphere? Why is it relevant? And, how it focuses on risk-based approach? We’d be answering the same in a lucid yet understandable manner.

When any person goes to a bank & applies to create an account, the respective bank builds a profile – basically a risk profile to learn about the risks a customer may bring upon. This mainly pertains with a perspective of financial crimes and associated criminal acts. In fact, the indulgence of suspicious persons in this sector has made AML like steps necessary.

Like we highlighted the industries and some more to incorporate KYC is a stringent requirement. For example, defense contractors and subcontractors may deal with Classified Information while creating products for contractual agreements, but no one can receive an approval until they have proven their credentials and adhere to certain standards by following compliance rules. Getting certified by authorized entities is another aspect.

Therefore, KYC or Know Your Customer or Know Your Counterpart are essential for pursuing a risk-based approach to identify a customer, mitigate risks attached to them and handle appropriately when required by following the established best practices. Software technologies play a pivotal role in KYC programs and benefit any business for long-term.