If you are also the one who uses online payment apps, then you must have heard the term KYC. Today, it’s an important element to prevent financial crimes like money laundering. But what it is and how does it work? So let’s start with its definition.
What Is KYC?
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The full form of KYC is Know Your Customer or Know Your Client. It’s a basic identification process performed by the banks to verify their customers. In other words, banks make sure that their clients are really who they claim to be.
The identification takes some personal documents verification of customer like ID cards verification, Face verification, address proof verification, etc. Without it, banks refuse to open an account or make any relationship with clients.
Also Read: KYC In Cryptocurrency: What Are The Benefits, Risks And Challenges Involved With It
Why KYC Process Is So Important In Banking Sector?
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KYC ensures their customers are real, assess, and monitor risks. This client verification helps in preventing and identifying money laundering, terrorism financing, and other illegal activities.
By this process, banks verify all the information about their customer like ID verification via Voter ID card or Aadhar card, face verification via photos, address proof via electricity bill. Having this information helps banks to view the financial position of customers and can track any financial scam.
The responsibility of the verification is all on the banks. If they fail it, heavy penalties can be applied to banks.
Also Read: All You Need To Know About Paytm KYC And How It Works
Types of KYC Verification Process
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There are only two types of KYC processes. People can choose according to their will.
1. Aadhar Based
Aadhar based KYC is an online verification that you can do from the comfort of your home. The process needs to upload a scanned photo of their original Aadhar Card and provide face verification.
2. In-Person Verification
It is an offline mode of the verification process. If you are not comfortable with online mode verification, then you can visit the bank in person and verify it. Submit copies of all the documents at the bank.