Know Your Customer (KYC)

What does Know Your Customer (KYC) mean?

Know Your Customer (KYC) means that an organization or governing body requests proof of identity before allowing an individual or company to conduct transactions with them. It’s a process by which organizations collect and verify the identities of their clients, and can help screen for potential criminal activity.

The process usually requires a user to provide an official, government-sanctioned document to confirm their identity. A few examples include driver’s licenses, passports and I.D. cards. To confirm that the person they're conducting business with is who they claim to be, regulations require financial institutions to collect customer data.

Why is KYC necessary?

Know Your Customer (KYC) laws and regulations are necessary to help banks, exchanges and other financial institutions comply with their legal obligations to prevent money laundering, fraud and other criminal activity.