What does KYC stand for?

KYC stands for 'Know Your Customer,' referring to the regulatory process for businesses, especially financial institutions, to verify the identity of their clients.

Why is KYC important for financial institutions?

KYC is crucial for preventing financial crimes such as money laundering, terrorist financing, and fraud. It helps institutions assess customer risks and maintain the integrity of the financial system.

What type of information is usually collected during KYC?

Typically, KYC involves collecting government-issued identification (e.g., passport, driver's license), proof of address (e.g., utility bill), date of birth, and sometimes biometric data or source of funds information.

Who is required to comply with KYC regulations?

Primarily banks, credit unions, investment firms, fintech companies, and increasingly, crypto exchanges and other businesses dealing with significant financial transactions must comply with KYC.

What are the consequences of non-compliance with KYC?

Failure to comply with KYC regulations can lead to severe penalties, including substantial fines, reputational damage, operational restrictions, and even criminal charges for institutions and their leadership.