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Know Your Customer

The document outlines the Know Your Customer (KYC) process, which involves verifying customer identities to prevent financial crimes such as money laundering and terrorist financing. It emphasizes the importance of customer due diligence, including identity verification and transaction monitoring, to detect suspicious activities. KYC serves as a foundational measure in combating financial crime and enhancing the integrity of the financial system.

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14 views1 page

Know Your Customer

The document outlines the Know Your Customer (KYC) process, which involves verifying customer identities to prevent financial crimes such as money laundering and terrorist financing. It emphasizes the importance of customer due diligence, including identity verification and transaction monitoring, to detect suspicious activities. KYC serves as a foundational measure in combating financial crime and enhancing the integrity of the financial system.

Uploaded by

liying070830
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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The Frontline Defense Against

Financial Crime

KNOWING YOUR CUSTOMER


What is Know Your Customer?
The process in which financial institutions verify the identity of their customers

Involves collecting, verifying & monitoring customer information to assess risk of


illegal activities (e.g. money laundering, terrorist financing) & ensure
compliance with regulatory requirements

Money Laundering Terrorist Financing


Disguising illegal funds to pass off as legitimate The funding for acts of terrorism

Sources Can Be,


Steps, - Legitimate: donations, business income
1. Placement: injecting illegal funds into economy - Illegitimate: extortion, drug trafficking
2. Layering: masking its origin through transfers
3. Integration: funds re-enter economy as ‘clean’ BUT! methods to conceal funds’ link to terrorist
money groups are always illegal

Key Elements Of Standard Customer Due Diligence


Authentication Of Identities,
Identification
- For Individuals: customer
& Verification
- For Non-Individuals: representatives & beneficial owners

Business
Understanding intended activity to establish expected activity threshold
Nature

Monitor & Regularly reviewing & modifying transaction patterns to detect & report
Modification suspicious activities

Non-Face-To-Face Verification
Off-site identity verification (e.g. online, post
& telephone) is more vulnerable to fraud Risk Mitigation Measures,
1. Independent Source Verification: 3rd party checks
like employment confirmation with company
Types Of Fraud,
Account Takeovers 2. Financial & Address Validation: show proof of
Deepfakes financial activity & verify residence via mail
Synthetic Identities
SIM Swap Scams 3. Enhance Authentication: strengthen identity
proofing through multi-factor & biometric tech
Fake Correspondence

~ IN SUMMARY ~
1) Verifies True Identity, 2) Supports Early Detection
Assesses Risk Levels & Of Suspicious Activity &
Monitors Transactions Limits Fraudulent Access

KYC: The
Foundation Of
Anti-ML &
Countering TF
3) Disrupts Flow Of Money
4) Strengthens Integrity
Laundering & Terrorist Financing,
Of Financial System
Curtailing Their Activities

Stop Financial Crime Before It Begins


— Know Your Customer

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