Governments from all parts of the globe have identified financial fraud as the primary evil of modern society. Most crimes have a distinct financial connection that includes money laundering and bribes, this is where KYC as part of the account opening process becomes crucial.

What does the data say?

A recent study shows that the net money laundered by criminals amounts to almost 5% of the total world GDP. In terms of money, the amount comes to a shocking £1 trillion, It also suggests that more than £650 billion goes in paying bribes. This in return results in a 10% increase in the total running cost of a company.

How does the KYC requirements help during the account opening process?

Financial Institutions in all parts of the world have now made KYC mandatory as part of the account opening process. KYC allows the financial institutions to get information about people behind the entities that are willing to use their services. Banks check the credibility, legal validity, and authenticity of the concerned individual/entity through a multi-layered checking process, document submission and personal checking through credible sources are some of the techniques that are used by the financial institutions to eliminate the risk of fraud.

Why is KYC important at the account opening stage?

The customers are the softest target for criminal minds, there are many cases where innocent people have been used for money laundering. The most important part is that these victims rarely fail to recognise the fact that they are been used for something illegal. This is where KYC can prove to be a lifesaver as you can identify any potential risk at the time of the initial onboarding as part of the KYC process.

Preventing financial crime

KYC plays a very important role in preventing financial crime, the Financial Institutions analyses every single customer separately to identify the risk involved at the time of the initial onboard as well as ongoing basis to identify any changes. The services that are offered also depend on the findings and previous history of the concerned customer, this micro analysis makes it difficult for criminals to use the financial institutions for illegal monitory transactions.

Things that you need to do

As a customer, you need to be honest and transparent with your banking partner, you need to realise that the entire process of KYC is for your own good and safety. As long as you provide all necessary information without hiding any details, you should be just fine. As a client, you need to be supportive and allow the financial institutions to do their necessary checks.

What will you get out of it?

You will get a cleaner and safer system to go ahead with your financial dealings. In other words, your money will be more secure and a lot safer. You will also be able to do your bit in fighting the global menace of financial fraud.

Wrapping it up

KYC is now mandatory for opening new accounts with Financial Institutions, the entire process is about trying to understand their customers better. This not only makes banking safer for clients, but also prevents Financial Institutions being used for criminal activities such as money laundering and bribes. Financial Institutions including some of the biggest banks from all parts of the world have now joined their hands in making banking safer for customers.

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