What does “KYC” mean?
“Know Your Customer” or “Know Your Client” is the abbreviation for this statement. The Know Your Customer (KYC) process involves identifying and verifying a client’s identity during account opening and on a frequent basis subsequently.
When doing business with clients, banks must fulfil the KYC requirements. They prevent fraud and money laundering by verifying IDs before entering our banking system.
Customer Acceptance Policy
The bank’s Customer Acceptance Policy (CAP) is crucial to building client relationships. The bank may face severe regulatory, legal, and reputational risks due to a weak CAP or poor execution.
These are the critical components of the customer acceptance policy.
- Accept only clients whose identities have been verified through suitable due diligence according to the client’s risk profile.
- If the investor is new, the account must only be opened once pre-account opening KYC procedures and documents have been completed.
- (a) documents that must be collected according to industry standards.
- (b) the client’s identification will be verified by the support desk.
- (c) PBSPL will implement the KYC process following industry best practices.
- Only after the customer acceptance process is finished may any client transaction be accepted. However, in the case of low-risk consumers, the Customer Acceptance Procedure and Transaction Acceptance Procedure may be started simultaneously.
- The opening of a new account may be refused if customer acceptance policies forbid a customer and the consumer refuses to provide the requested additional information. The account opening or money transaction request form may contain a suitable condition to this effect.
- Through reputable partners, mutual fund partners, relationship managers, or any other known person, the clients are added to the system.
- Partners, relationship managers, or any other well-known individuals
Monitoring of Transactions
The term “transaction monitoring” means the practice of keeping tabs on business dealings between a company and its clients. This technique often involves looking at both historical and current data to get a full picture of customer behavior.
Transaction monitoring recommendations:
- Use flexible rule-making
Monitoring transactions is dependent on rules, which require regular updating in order to take into account possibly suspicious activity. The transaction monitoring system ought to offer independent, adaptable rule-building and testing because of this.
- Use AI to improve rule-based transaction monitoring systems.
Transaction monitoring systems traditionally identified unusual behavior using rules. For instance, a rule may require an alert if a consumer spends over £10,000. Rules can only catch confirmed money laundering.
- Streamlining transaction monitoring should begin with the client.
A glance at a customer’s transactions is frequently useless. AML transaction monitoring must provide a “single picture of the customer” throughout the client’s lifecycle to give intelligence and insight.
Risk management is the process of identifying, assessing, and limiting risks to an organization’s assets and financial success. There are many sources of these dangers. involves financial uncertainty, legal liability, technology issues, strategic management mistakes, accidents, and natural disasters.
The KYC regulations are crucial for assisting banks in identifying and reducing risks before they become a hazard. Even while they can be a hassle, in most situations the security advantages they provide surpass any inconvenience.
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