Know Your Customer (KYC)
KYC (Know Your Customer) is the basis of effective customer research and compliance. It helps organizations manage risks and comply with the Wwft.
What is KYC (Know Your Customer)?
Know Your Customer, often abbreviated as KYC, is the process by which companies determine who a customer is and whether that person poses a risk for money laundering or terrorist financing. KYC is therefore about identification and verification. For organizations that fall under the WWFT (Netherlands) and/or AML (European) regulations, KYC is a mandatory part of the customer acceptance process.
What's involved in a KYC process?
KYC focuses on collecting and verifying basic information about a (potential) customer. The goal: to ensure that someone is who they say they are. The process usually consists of:
- Identification: collecting data from a customer or representative
- Verification: checking whether this data is reliable and up to date
- Document verification: checking official documents, such as a passport, extract from the local chamber of commerce, or shareholder structure
- Risk indication in broad terms: are there clear signs indicating increased risk?
Relationship between KYC and CDD
KYC and the Wwft
Why is KYC mandatory?
The Wwft/AML requires companies to know who they are doing business with. Without a completed KYC check, you are not allowed to start a business relationship. KYC forms the foundation of compliance:
- It prevents anonymous or uncontrollable transactions;
- It protects companies against reputation and integrity risks;
- It ensures that you comply with legal identification and verification requirements.
When should you perform a KYC check?
A KYC check is mandatory when:
- You enter into a new customer relationship
- An existing customer changes its structure or representative (UBO);
- Doubts arise about previously submitted data;
- You see signs that indicate an increased integrity risk.
Deepening
KYC is part of Compliance Management. Read more about this on our Compliance page.
