Know Your Customer

Know Your Customer (KYC) is defined as the process by which a broker is verifying the true identity of its clients.

This is done in order to comply with multiple regulations that have now become commonplace in several jurisdictions worldwide.

KYC provides a lot of uses and is typically utilized to assess the suitability of customers when it comes to anti-money laundering regulations.

Additionally, these measures help curb any type of financial fraud and determine whether a client is potentially risky for the brokerage.

KYC guidelines in financial services dictate that individuals make a concerted effort to verify the identity, suitability, and risks involved with maintaining a business relationship.

This has obvious benefits for both parties. KYC processes are also performed by companies for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant.

Know Your Customer Becoming a Fixture of Retail Brokers

KYC has become a major emphasis by regulators, especially given the perils of the present as an age of identity theft and increased risks of hacks.

Banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information.

Such regulations had initially been necessitated only on financial institutions.

However, now these are extended to the non-financial industry, fintech, virtual assets dealers, and many non-profit organizations.

The retail industry has undergone a large change over the past few years with regulated brokers now becoming very stringent when applying appropriate KYC verifications.

This has followed after financial watchdogs worldwide have in turn become strict in monitoring their compliance with the procedure in recent years.

Not only brokers use KYC, as this procedure is widely adopted and preferred by banks and any financial companies that provide insurance or credit and require appropriate due diligence.

Major jurisdictions in the financial space mandate KYC requirements as well as all regulated brokers.

The vast majority of these countries have adopted KYC standards as mandatory only during the past two decades.