GLOSSARY
KYC (Know Your Customer)
The regulated process by which financial institutions verify the identity of individual customers and assess their risk profile before opening accounts or transacting.
KYC (Know Your Customer) is the regulated process by which financial institutions and other obliged entities verify the identity of individual customers, capture beneficial-ownership information, and assess each customer's risk profile before opening accounts or transacting. It is the personal-customer counterpart of KYB, which applies to legal-entity customers.
Why it matters
KYC is mandated under anti-money-laundering (AML) regimes worldwide — the U.S. Bank Secrecy Act, the EU Anti-Money Laundering Directives, the UK Money Laundering Regulations, and FATF-aligned national laws. Failure to complete KYC exposes institutions to civil and criminal penalties, license revocation, and reputational damage.
A complete KYC programme combines customer identification (name, date of birth, address, government ID), customer due diligence (source of funds, expected activity, denied-party screening), and ongoing monitoring as risk indicators change. Enhanced due diligence (EDD) applies to higher-risk customers — politically exposed persons, high-risk jurisdictions, or unusual transaction patterns.