End To End KYC Walkthrough (Brief Introduction)

About this video

• Video Title: End To End KYC Walkthrough (Brief Introduction)
• Channel: Niki Shingrani
• Speakers: Niki Shingrani
• Duration: 00:22:06

Overview

This video provides a comprehensive walkthrough of the end-to-end Know Your Customer (KYC) process, explaining its importance in financial institutions for background checks, risk assessment, and compliance with anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.

Key takeaways

• KYC Definition: KYC (Know Your Customer) is a process for organizations to verify the background of their clients, including financial activities, industry, revenues, products sold, and associated risks.
• Core Components: KYC is built upon two pillars: AML (Anti-Money Laundering) and CFT (Combating the Financing of Terrorism).
• Four Main Steps: The KYC process involves Customer Identification (CIP), Customer Due Diligence (CDD), Risk Assessment, and Ongoing Monitoring (Periodic Review).
• Customer Identification (CIP): This involves identifying and verifying a customer's identity before they can conduct business, using documents, data, open media sources, and customer-provided details. It also includes checking for financial deficits and potential money laundering activities.
• Customer Due Diligence (CDD): This is a series of checks to fulfill government and regulator requirements. It involves collecting and verifying information such as source of funds, source of wealth, business registration, ownership details, director information, and authorized signers. It also includes checking sanction lists and public/private data.
• Risk Assessment: This step analyzes collected information to determine a customer's risk profile (low, medium, or high). Factors influencing risk include clear identification and verification, geographic risks (country of citizenship, residence, operations), source of funds/wealth, and the type of products purchased from the bank.
• Risk Parameters: Key parameters include identification and verification completeness, identification of interested parties, geographic risks, country of taxation/operations/headquarters, source of funds/wealth, and high-risk products.
• Periodic Review: This ongoing monitoring is based on the customer's risk score: low-risk clients are reviewed every three years, medium-risk every two years, and high-risk clients annually.
• Accelerated Review: This occurs due to significant events like mergers, acquisitions, litigations, fines, liquidation, sanction violations, negative news, bankruptcy, or changes in business operations or geography.