Know Your Customer (KYC) Policy

Our compliance framework ensures safety, transparency, and accountability.

Know Your Customer (KYC) procedures are a critical function to assess and monitor customer risk and are a legal requirement to comply with Anti-Money Laundering (AML) laws.

“KYC” refers to the steps taken by a financial institution (or business) to:

  • Establish customer identity
  • Understand the nature of the customer’s activities and source of funds
  • Assess money laundering risks for effective monitoring

1) Customer Identification Program (CIP)

The CIP mandates that any individual conducting financial transactions must have their identity verified. As a provision in the Patriot Act, it limits money laundering, terrorism funding, corruption, and other illegal activities.

Each financial institution must establish its own risk-based procedures to identify customers accurately and comply with federal guidelines.

2) Customer Due Diligence (CDD)

Customer Due Diligence is essential in determining the trustworthiness of potential clients and protecting the institution from financial crimes.

There are three levels of due diligence:

  • Simplified Due Diligence (SDD): For low-risk accounts or low-value transactions.
  • Basic Due Diligence (CDD): Standard verification and risk assessment for all customers.
  • Enhanced Due Diligence (EDD): Applied to high-risk customers or politically exposed persons (PEPs).

3) Ongoing Monitoring

Institutions must continuously monitor financial activities and flag suspicious transactions. Monitoring ensures compliance and protection against evolving money-laundering techniques.

As of January 2017, the New York Department of Financial Services (NYDFS) requires institutions to maintain comprehensive transaction monitoring and filtering programs.

Global KYC Initiatives

Around the world, regulators are introducing stricter KYC/AML requirements. For instance, the Monetary Authority of Singapore is piloting a national KYC utility leveraging digital identity verification.

The increasing digitization of financial services requires KYC policies to evolve, ensuring both compliance and customer convenience.