What's KYC and Why Your Business Needs It

Know Your Customer (KYC) is a critical process that helps businesses verify the identity of their customers and assess their risk of involvement in financial crime. According to the World Bank, financial crime costs the global economy an estimated 2.5% of GDP. By implementing effective KYC procedures, businesses can protect themselves from financial losses and reputational damage.

Benefits of KYC

Story 1: Preventing Fraud

Benefit: Reduced risk of fraud and identity theft.

How to Do It: Collect and verify customer information, such as name, address, date of birth, and government-issued identification.

Method	Effectiveness	Cost
Identity Verification	High	Medium
Document Screening	Medium	Low
Risk Scoring	Medium	Low

Story 2: Compliance with Regulations

Benefit: Avoid fines and legal penalties for non-compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

How to Do It: Develop a comprehensive KYC policy that meets regulatory requirements. Implement procedures to monitor customer transactions and report suspicious activity.

Regulation	Region	Penalties
AMLD5	European Union	Up to €10 million or 10% of annual turnover
FATCA	United States	30% withholding tax
OFAC	United States	Civil and criminal penalties

Story 3: Improved Customer Experience

Benefit: Enhance customer trust and satisfaction by providing a secure and transparent onboarding process.

How to Do It: Use digital onboarding tools to streamline the KYC process and make it more convenient for customers. Communicate clearly about KYC requirements and the steps involved.

Tool	Benefit	Cost
Digital Onboarding	Faster onboarding, reduced manual effort	High
Electronic Signature	Secure and convenient document signing	Medium
Biometric Authentication	Improved security, reduced fraud	High

What's KYC and Why Your Business Needs It