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KYC

KYC (Know Your Customer) is a critical process used by financial institutions to verify customer identities and prevent fraudulent activities, including money laundering and terrorist financing. The KYC process involves customer identification, verification, and ongoing monitoring, with various methods such as MyKad-based KYC, in-person meetings, and eKYC. The benefits of KYC include reducing financial crime risks, protecting customer data, and ensuring compliance with regulatory requirements.

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2 views

KYC

KYC (Know Your Customer) is a critical process used by financial institutions to verify customer identities and prevent fraudulent activities, including money laundering and terrorist financing. The KYC process involves customer identification, verification, and ongoing monitoring, with various methods such as MyKad-based KYC, in-person meetings, and eKYC. The benefits of KYC include reducing financial crime risks, protecting customer data, and ensuring compliance with regulatory requirements.

Uploaded by

Agumon Gabumon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Definitions of KYC

 KYC is an essential component of the entire AML framework.


 KYC is a process used by financial institutions to identify and verify the
identity of their customers.
 KYC involves verifying the client’s original identity through name, age,
address, ID card, face verification and business information.
 The goal of KYC is to ensure that customers are who they claim to be
and to prevent fraudulent activities, such as money laundering,
terrorist financing and others.

Objectives of KYC
1- Identify the customer
2- Verify the client’s true identity
3- Understand the customer’s verification and SOF
4- Monitor the customer’s activities regularly

The Verification Process


1- Check against government databases
2- Public records
3- Ensure they are not on any sanctions or watchlists.

Benefits of KYC
o Reduce the risk of financial crime, fraud prevention, identity theft
o Protect customers personal data and financial information
o Secure Customer Onboarding by ensuring the authenticity and security
of new customers.
o Secure Customer Retention by building strong relationships with
existing customers to maintain a loyal and satisfied customer base.
o Comply with regulatory requirements

Types of KYC
1) MyKad-based KYC
-Online process
-The customer is required to upload a scanned copy of MyKad.
2) In-Person Meetings
-Offline F2F process
-Visit branch for biometric verification
3) eKYC
-To avoid spoof attack (impersonate person)
I. Document verification
II. Video verification
III. Facial recognition
IV. Liveness detection

Components of KYC
1- Customer Identification Program: Gathering personal details such
name, address, DOB and ID no.
2- Verification information: Verifying the customer's identity through
government-issued documents, address verification, and background
checks.
3- Customer Due Diligence: To evaluate the threat posed by
customers.
I. Simplified due diligence
II. Standard due diligence
III. Enhance due diligence.
4- Ongoing Monitoring: Continuous surveillance is vital for detecting
fraudulent transactions and irregular money movement in the financial
system. Such
I. Transaction above the specified threshold
II. A large number of frequent transactions
III. Unusual and suspicious activities
5- Documentation: Store all collected documents and information
securely in accordance with regulatory requirements.

Financial crime
1) Identity theft: Using KYC can establish proof of customer’s identity.
Potential to stop the creation of fraudulent accounts.
2) Money laundering: Criminal use sham/fake accounts in banks to
launder money obtained from illegal activities. Phantom account, Shell
account and Nominee account.
3) Fraudulent financial activities: Stolen or fake identification used to
apply for a loan.

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