Know Your Customer or Know Your Client is control procedures that financial institutions that offer financial services apply to existing and new customers to identify and avoid risks. KYC (Know Your Customer) plays a key role in eliminating the risks associated with money laundering, terrorist financing, corruption, fraud, bribery and other illegal financial activities. The control processes implemented in Know Your Customer ensure that the business has the necessary information about the customer to open an account and ensures that the risk level of the customer is determined.
KYC regulations apply to financial service providers such as banks, payment companies, lending companies, investment companies, money transfer companies, crypto exchanges and insurance companies. Regulators require organizations at risk to follow a risk-based approach to prevent organized crime risks. With Know Your Customer regulations, financial institutions detect the risks they may face in the future with the control procedures they apply before opening a new customer account. KYC, which is the first step of Anti-Money Laundering programs, also prevents the potential risks by verifying the customer identity.
With the development of technology, crime techniques and risks also change. Financial institutions need to follow KYC regulations and Anti-Money Laundering laws to detect and prevent crime risks that organized crime organizations have developed using technology. Obligated organizations that do not comply with AML and KYC regulations remain vulnerable to financial crimes and are punished by regulatory agencies.
KYC policies have important functions in the fight against financial crimes. The client onboarding process plays a key role in detecting suspicious activities involving money laundering and terrorist financing risk. The importance of KYC is also stated in the European Union Directives and Financial Action Task Force proposals.
Controls to be applied in customer account opening processes according to regulatory requirements:
One of the controls to determine the customer's risk level is sanctions, PEP and Adverse Media checks. Financial institutions check whether there is a sanction decision applied to the customer to open an account in order not to violate the sanction decisions. Apart from that, Politically Exposed Persons are high-risk customers for financial institutions. PEPs are not forbidden to open accounts, but because they are high-risk customers, they need to be checked more frequently by AML officers. Negative news about the customer is controlled with Adverse media controls.
Sanction Scanner is an AI-driven AML/KYC compliance software. Sanction Scanner provides enhanced global sanction, PEP and adverse media screening services. With Sanction Scanner, you can check your customer. Our database consists of over 1000 Sanction lists, regulatory and law enforcement and other official global and local sanction and pep lists, including those issued by the USA, UK, UN and other global major and minor government departments. Sanction Scanner provides end-to-end needs of organizations in this field because of its many features, API and integration capability, and the ability to create local lists. It reduces your operational costs and development efforts.
As Sanction Scanner, we are committed to the protection of all financial companies, large or small, from financial crimes. We aim to provide the best support and service to our customers, so we respond to customers' feedback as quickly as possible. For more information, please contact us on our website.
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