Glossary

Know Your Customer (KYC)

What is Know Your Customer?

Know Your Customer (KYC) is a standard banking and stock exchange procedure for identifying and verifying the customer’s identity who wants to conduct any financial transaction.

The goal of KYC is to prevent the use of banking and exchange institutions by criminals for various purposes. So, the bank uses the verification of the person who performs a financial transaction.

Except for it is a banking and stock exchange term, other companies working with private money apply it as well. That means they must identify the counterparty before conducting a financial transaction. This requirement applies to obtain reasonably complete information. It includes counterparties-legal entities, their business nature and individual business transactions for which the bank performs the financial operation.

This practice is believed to prevent money laundering, terrorist financing, and tax evasion. The national legislation, regulatory documents of banking regulators, and international organizations influence the KYC requirements and standards.

Which documentation identifies an individual in the KYC system

The KYC has a standard view for both businesses and individuals. The nature of the upcoming procedure identifies its composition. For example, to open a bank account, you will need to provide along with the completed application form:

  • A notarized copy of the relevant (with a photo and signature) passport pages;
  • Proof of place of residence (it can be a certified translation of pages of a resident’s passport with a photo, signature, and place of residence or, for example, a certified copy of the bills for utilities provided);
  • A recommendation from a bank where the applicant already has an account or a letter of recommendation from a lawyer or a certified accountant accompanying his activity (it should include the status of the relationship).
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