KYC Full Form

Businesses typically use KYC when onboarding new customers. They may also use it periodically to check that their customer's identity information is still up to date. What do you think of KYC? Is it necessary? Do you think it deters customers from doing business?

What is the full form of KYC?

The full form of KYC is Know Your Customer. KYC aims to help businesses prevent money laundering and other fraudulent activities. To do this, businesses need to collect certain information about their customers. This can include the customer’s name, address, and date of birth.

When is KYC Required?

To comply with anti-money laundering and counter the financing of terrorism regulations, businesses must verify the identity of their customers. This is typically done through a process known as the “know your customer” or KYC.

There are several different circumstances when KYC may be required. For example, businesses may need to carry out KYC checks when onboarding new customers, transactions above a certain threshold, or doubts about the customer’s identity.

In order to comply with KYC requirements, businesses must gather certain information from their customers, such as their full name, date of birth, and address. They may also need to take steps to verify the customer’s identity, such as by checking their ID documents or running a credit check.

Complying with KYC regulations can be challenging for businesses, especially with a large customer base. However, several software solutions can help automate the process.

Benefits of KYC

There are many benefits of KYC or Know Your Customer compliance for businesses. 

• Prevents financial crime:  By having KYC in place, businesses can ensure that they are not unknowingly involved in money laundering or other illegal activities.
• Better relationships with customers: By better understanding who their customers are, businesses can provide a more personalised and tailored service. This can lead to improved customer satisfaction and loyalty.
• Avoids costly fines:  Failing to comply with KYC regulations can lead to hefty fines from regulatory bodies. Therefore, it is in businesses’ best interests to ensure that they have a robust KYC compliance regime in place.

KYC in Banking

In the banking world, KYC (know your customer) is a critical process for maintaining compliance and reducing risk. By verifying the identity of customers, banks can prevent illicit activity and protect their businesses.

The KYC process typically includes collecting customer information, verifying identity documents, and keeping records up to date. This can be time-consuming, but banks need to get it right.

Banks have been using KYC for years, but the process has come under increased scrutiny recently. With new regulations and heightened risks, banks need to be sure they are doing everything possible to verify customer identities.

What is eKYC?

eKYC is an electronic know-your-customer process that enables businesses to verify the identity of their customers quickly and securely. It involves using various data sources to verify identity, including documents such as passports and ID cards and biometric data such as fingerprints and iris scans.

eKYC can help businesses to meet KYC requirements more efficiently and can also help to improve customer experience by making the onboarding process quicker and simpler. eKYC can be used for various purposes, such as opening a bank account, getting a mobile phone contract, or applying for a loan. 

The benefits of eKYC for businesses include the following:

• Reduced costs: eKYC can help to reduce the costs associated with KYC compliance by eliminating the need for paper-based processes and manual data entry.
• Improved customer experience: eKYC can make the customer onboarding process quicker and simpler, improving the customer experience.
• Increased security: eKYC can help improve customer data security by reducing the need to store and transmit paper documents.
• Improved compliance: eKYC can help businesses to meet KYC requirements more effectively by providing a more complete and accurate view of customer identity.

Documents Required For KYC Verification

The documents for KYC verification include identity proof and address proof. We are jotting down the primary documents which are required for the KYC verification:

Identity Proof 

• Aadhaar card
• PAN card (original)
• Driving License
• Voter ID
• ID proof issued by the government with the photograph of the applicant
• ID proof issued by commercial banks, PSUs, or public financial institutions
• ID proof issued by a college, university, or any educational institution

Address Proof

• Aadhaar card
• PAN card (original)
• Driving License
• Voter ID
• Ration card
• Utility bills for the past three months
• Bank account statement for the past three months
• Address proof validated by the banks
• ID card issued by ICAI, ICSI, or bar council
• Municipal tax receipt

Types of KYC Verification

There are multiple types of KYC (Know Your Customer) verification, each with its requirements. The most common KYC verification types are:

• Paperless KYC
• Digital KYC
• Offline KYC
• Central KYC

KYC Verification Process

The KYC or “Know Your Customer” verification process is a crucial part of any business that deals with financial transactions. The process usually involves collecting basic information about the customer and then verifying it through one or more methods: government-issued ID, utility bill, bank statement, or credit report. Depending on the nature of the business and the customer’s risk level, the KYC verification process can be either simple or quite extensive.

Paperless KYC

To maintain privacy, security, and inclusion, UIDAI has launched Aadhaar Paperless Offline e-KYC Verification, allowing Aadhaar holders to authenticate themselves in various applications paperlessly and electronically. 

You can obtain your Aadhaar e-paperless KYC by following the steps outlined below:

Step 1: Visit the resident portal  to download the Aadhaar Paperless Offline e-KYC.

Step 2: Enter your Aadhaar number, security code, and the OTP sent to your registered mobile number.

Step 3: Enter your AADHAAR/VID and create a 4-character Share Code. A ZIP file containing the resident’s offline paperless KYC will be password protected using the same Share Code. Residents will be able to download the file to their desktops.

Steps to do Online KYC Using Aadhaar OTP

Step 1: Browse the official website of any KRA.

Step 2: Create your account by providing your AADHAAR details and registered mobile number.

Step 3: Enter the OTP to verify

Step 4: Select Aadhaar and upload the self-attested copy

Step 5: Accept the declaration terms and conditions

Steps to do Online KYC Using Aadhaar Biometric Data

Step 1: Navigate to the official website of any KRA

Step 2: Enter your AADHAAR and registered mobile number to create your account.

Step 3: Select Aadhaar biometric verification from the menu

Step 4: An authorised representative will visit your residence to collect biometrics.

Step 5: You must show the original documents as per the requirements.

Step 6: KYC approval will take 24 hours to process.

Steps to do Offline KYC

Step 1: Get the KYC form by downloading it

Step 2: Fill out the required fields

Step 3: Find a KRA office near you

Step 4: Attach KYC documents and biometric data to the form

Step 5: The agency will provide you with a confirmation slip with a tracking number.