what is kyc in bank

KYC stands for "Know Your Customer" and is a process by which banks obtain information about the identity and address of their customers. The KYC process is mandatory and involves identifying and verifying the clients identity when opening an account and periodically over time. The process includes ID card verification, face verification, document verification such as utility bills as proof of address, and biometric verification. KYC is a legal requirement for financial institutions and financial services companies to establish a customer’s identity and identify risk factors. The purpose of KYC is to ensure that banks services are not misused and to limit fraud. Effective KYC processes are the backbone of any successful compliance and risk management program, and the demands of meeting KYC obligations are intensifying. KYC compliance responsibility rests with the banks, and in case of failure to comply, heavy penalties can be applied.