Know Your Customer (KYC) or Know Your Client is a control procedure that financial institutions that offer financial services apply to exist and new customers to identify and avoid risks. Know your customer Check 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 the know your customer due diligence checklist ensure that the business has the necessary information about the customer to open an account and ensure that the customer's risk level 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. Know your client check, 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. For this reason, obliged institutions must fulfill Know Your Customer requirements.
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 they need to be checked more frequently by Anti-Money Laundering officers because they are high-risk customers. Negative news about the customer is controlled with Adverse media controls.
Sanction Scanner is AML and KYC compliance software. Sanction Scanner provides enhanced PEP, Sanction, and Adverse Media Screening services. With Sanction Scanner, you can easily KYC Check. Sanction Scanner has consisted of over 1000 Sanction lists in the database. Also, our database consists of regulatory, other official local and global sanction and pep lists, including global 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 talk to us.
Request a demo and learn how Sanction Scanner protects your firm from the Financial Crimes.Request Demo