The word KYC (know your customer) has rapidly become one of the most-used words since the government had made AADHAR card compulsory.
The KYC process has become a vital part of getting important services these days, such as getting a gas or LPG line or even buying an insurance policy.
Read on to know everything there is to know about KYC.
What is KYC?
The main aim of conducting KYC is to verify the identity of clients and additionally examining the probabilities of any illegal wrongdoings.
Another reason due to which almost all major companies and organizations are carrying out KYC is to make sure that their distributors, consultants, and agents are bribery-free and are not involved in any unlawful activities.
In other words, it ensures that the information provided is real and authentic.
What are the benefits of KYC?
Even though the KYC process has received mixed reactions, there is no denying the fact it has several benefits. The benefits are as follows:
- It makes sure that all monetary transactions are legitimate and transparent.
- It is responsible for fighting against any kind of criminal activities, such as money laundering, bribery, fraud, black money etc.
- Due to its transparent nature of working, it helps in avoiding reputational, tax and legal discrepancies or problems.
- It works towards stopping con artists and scammers from stealing money.
- One of the biggest advantages of KYC is that it successfully establishes the credibility of the customer.
- KYC also serves as good news for investors and their assets. If you have got your KYC done, be rest assured that no one else apart from you can access your assets and exploit it. Since the concerning, authority already has all your necessary details; it can be difficult to get to them through any illegal means.
What is the process of KYC?
In order to facilitate the KYC process, you will need to submit a few documents which as follows:
- Identity proof such as PAN card/ Voter ID/ Passport/ AADHAR/ Drivers License
- Address proof
- A recent photograph of yours in which your face must be clearly identifiable
- Proof of Date of Birth
Once you submit all these documents to the respective organization or company, they will verify everything. After everything is verified, you will be notified that your KYC is complete.
The exact KYC method may vary from one organization to the other. For example, if it’s a bank, then you may have to submit an affidavit signed by an account holder of that bank.
This may not be the case when you purchase a SIM card where your identification documents are enough.
To determine the exact nature of the relevant KYC procedure, go through the latest bank notifications or the notifications of the concerned organization.
Why is the process of KYC important?
KYC has become an important component when it comes to organizational functioning, especially of banks.
The main reason why KYC is important is that it actively works towards preventing banks from being exploited unintentionally or intentionally, to accumulate black money or other forms of money laundering activities.
It also contributes to helping banks to handle risks efficiently, by knowing and understanding their customers better.
KYC plays such an important part these days that you need to complete this procedure when you apply for government jobs in banks.
Many people tend to make the mistake of postponing their KYC, or worse still do not do it at all. However, without the KYC system, you will not be able to do many important necessary things, such as opening a bank account, as it will require you to submit your PAN card.