What is the full form of KYC? Importance of KYC (Know Your Customers)
Basically when we go to the banks and purchase mutual funds. They demand your identity and proof of your personality. So here are few questions that arise: What is KYC full form? What is the importance of KYC? What is the use of KYC? And what type of documents does KYC keep?
Well, in this article, I am going to describe all the above questions about KYC and its features. SO read the article till the bottom. Here we go!
What is KYC full form?
Actually, KYC full form is “Know Your Customers or Clients”. The term KYC is widely used in the banking and financing sectors. Banks and other Financial sectors ask the customers to prove their identity, home address, and accounts. KYC collects all information about the customer to secure his accounts and to identify the nature of the client or customer. KYC is a significant factor in the economic era to provide capability and creditability of a customer with respect to the back of financial segments.
However, the key focus of KYC is to validate the source of income by providing necessary documents that legitimate your identity and income source. According to Wikipedia “Banks, insurers, export creditors, and other financial institutions are increasingly demanding that customers provide detailed due diligence information. Initially, these regulations were imposed only on the financial institutions but now the non-financial industry, fintech, virtual assets dealers, and even non-profit organizations are liable to oblige.”
What are the KYC documents?
While before starting the KYC process, it requires five major documents. KYC is based on five documents:
- Voter’s Identity Card
- Driving License
- Address Proof (electricity bill, water bill)
- Ration Card
- PAN Card (permanent account number)
If you are failed to provide your address proof along with your account statements, then you have to attach an affidavit to give surety of your address.
What is the importance of KYC?
The bank managers take the KYC process regularly in a month or after any specific period. KYC has a lot of importance to secure your account and money as well:
- After you prove your identity, no one can access or misuse your account and you can start a successful business.
- KYC protects accounts from illegal criminal activity.
- It also protects your account from money laundering, corruption, and other illegal financings.
- The combination of AML (Anti-Money Laundering) and KYC is increasing the importance of securing accounts in many ways like online business.
- Through the KYC process, the bank and the customer stay in touch with each other.
- It enhances transparency and risk-free delivery of cross-border payments.
So, I hope you enjoyed the article about the full form of KYC. If you want to secure your account and prevent your bank accounts from illegal activities, let your bank or financial department do the KYC. If you have any queries regarding KYC full form bank, ask in the comment section.