What is KYC and why do we need it?




KYC or the Know Your Customer protocol is a legal requirement created for AML (Anti-Money Laundering) purposes. The legislation refers to the process of verifying the identity of customers, either before or when they begin to do business with you. For organisations working within financial services, such as banks and fintech companies, it’s particularly important when it comes to identifying and monitoring customer risk and fraudulent behaviour.  



KYC protects everyone 


In Europe, the fourth anti-money laundering directive (AMLD4) came into effect in June 2017 with a set of rules designed to protect financial entities from being exposed to money laundering. An enhanced version of this (AMLD5) came into effect in January of 2020improving transparency and co-operation between state authorities. 

Clearly, the regulations associated with KYC are becoming increasingly stringent, especially for financial services providers. Companies, including KoalaPays, must demonstrate ‘reasonable due diligence’ when establishing relationships with customers. As such, KYC allows companies to protect their businesses, as well as others who could be impacted by the effects of financial crime.  

KYC involves collecting information and data such as names, social security numbers, birthdays and addresses, ideally using electronic identity verification. Once the information has been collated, the data can then be compared with lists of known and potential financial criminals and those suspected of money laundering, bribery or corruption. 



Help with assessing risk 


By doing so, banks can assess if and how much risk a customer poses, reviewing their account for activity that might be suspicious. Financial institutions and policing organisations are then able to compare client profiles in an effort to see if the same person is operating under different identities. 

In terms of fintech companies, such as KoalaPays, KYC compliance has a significant impact on how customers open accounts and perform transactions on different types of devices. Obviously, we want customers to benefit from our services, but we also want to do our bit for fighting fraud and financial crime. By complying with KYC regulations, we can do this while mitigating risk for our own business. 

Fortunately, the state-of-the-art security solutions used by fintech companies, gives our customers peace of mind when it comes to partnering with us and using our services. It also gives us the confidence of knowing that we are fully compliant with KYC protocols. Our platform is fully PCI compliant with the latest fraud protection technology to ensure all your transactions are safe and secure.  

If you’d like to find out more about how we keep you safe, don’t hesitate to get in touch here. 

You might also be interested in:

Five metrics you should track for business success

Read more

Five innovative ways to grow your small business

Read more

Thank you for contacting us

We have received your enquiry and will respond to you as soon as possible.

In the meantime, why not check out our blog?