What is KYC verification?

KYC (Know Your Customer) verification is, essentially, an identity check. The process is an essential part of domestic and international Anti-Money Laundering (AML) Regulations – helping to prevent fraud, money laundering, and terrorist financing.

The checks are a mandatory process for industries that move vast sums of money, including:

• Banks, building societies and credit unions

• Financial advisors and traders

• Payment services

• Real estate agents

• Lawyers working in finance or real estate

As part of the growing trend towards digital-only businesses, many alternative industries are also introducing KYC checks to their financial practices. This includes cryptocurrency platforms, alcohol suppliers, casinos, gambling operators, and online gaming platforms.

What does KYC stand for?

KYC stands for Know Your Customer, but it’s also sometimes called Know Your Client. It’s an identity check process that banks and businesses must comply with to ensure their customers are who they say they are.

KYB – Know Your Business – is a similar procedure where financial institutions must perform verification checks on businesses and the people who own them.

What is KYC in banking?

KYC in banking requires financial institutions – not just banks, but also building societies and credit unions – to perform identity checks on new customers. 

These checks include requesting KYC documents to prove their identity and resident status. In the UK, these documents could be:

• Proof of identity – Passport, driving licence or photo card national identity card.
• Proof of address – Driving licence (if not being used as proof of identity), credit card statement, bank statement, mortgage statement, council tax bill, utility bill, or TV licence letter.

Along with KYC verification, financial institutions must also review, monitor and report any suspicious activity as part of wider anti-money laundering regulations.

Why is KYC important?

KYC checks are important for many reasons, including:

• Anti-Money Laundering – KYC checks help identify and prevent money laundering activities by verifying customers and confirming they’re not involved in illegal activities.
• Preventing financial crime – KYC regulations also help stop financial crimes, including fraud and terrorism funding, by enabling companies to assess a customer’s risk level before beginning a relationship with them.
• Protecting companies and their customers – By knowing exactly who their customers are, companies can help ensure their personal information is collected securely and their money is kept safe – protecting the business as well as its clients.
• Complying with regulations – Banks and businesses must comply with current UK and international laws and regulations or face a hefty fine. In 2021, the Financial Conduct Authority issued penalties of more than £555m to UK organisations who failed to complete the appropriate KYC checks.

What is the difference between KYC and AML?

KYC is a person verification policy that falls under a wider umbrella of AML (Anti-Money Laundering) regulations.

Where KYC involves a specific process – identity checks – AML covers a broad spectrum of laws and financial regulations, including:

• Large currency transaction reporting
• Suspicious activities monitoring
• Sanctions compliance
• Record-keeping

How to check KYC details online

As we move further towards a digital future, electronic KYC checks (known as eKYC) are quickly becoming the best and fastest way for online businesses to comply with AML regulations.

ukphonebook.com’s Person Verification tool is an easy and accurate way of confirming your clients’ identity. You will need to create an account and buy credits to use the service – each in-depth search costs 20 credits, with credit packages starting from £10.

We also offer an integrated API – T2A – with various possible applications for your website, including Person Validation and OCR/Biometric ID checks.

How long does KYC verification take?

KYC verification used to be a long process, involving posting documents across the country, and could take up to 10 days to complete. Thankfully, the internet has considerably speeded up the process. 

At ukphonebook.com, we can provide instant customer verification with our Person Verify tool.