Know Your Customer (KYC)
KYC (Know Your Client/Customer) is a standard banking and stock exchange procedure for identifying and verifying the identity of a customer 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 using the verification of the person who performs a financial transaction.
It is a term banking and stock exchange regulation for financial institutions and bookmakers, as well as other companies working with private money, meaning that they must identify the counterparty before conducting a financial transaction.
This requirement applies to obtain reasonably complete information about counterparties-legal entities, the nature of their business and individual business transactions for which the financial operation is carried out.
This practice is believed to prevent money laundering, terrorist financing, and tax evasion.
Currently, the requirements and standards aimed at the implementation of this principle are set at the level of national legislation, regulatory documents of banking regulators and international organizations.
Which documentation identifies an individual in the KYC system
The set of documents is standardized for businesses and individuals, and its composition is determined by the nature of the upcoming procedure. 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 (the status of the relationship should be described).