What is KYC?
Know your customer (KYC) is the set of checks a regulated business performs to identify and verify its customers, understand the relationship and assess money-laundering risk before and during it.
In more detail
KYC is part of customer due diligence under anti-money-laundering rules. The Financial Action Task Force's Recommendation 10 sets the core measures that countries then write into law: identify the customer and verify identity from reliable, independent sources, identify the beneficial owner, understand the purpose of the relationship and monitor it on an ongoing basis. Higher-risk customers, such as politically exposed persons, get enhanced checks. Who must do KYC and how depends on the country and sector, so confirm with your compliance officer. Automation helps with the document handling: collecting IDs and company records, extracting and cross-checking fields, running screening lookups and assembling a file for review. The risk decision and any exception stay with a trained compliance person. This is general information, not legal advice.
Example
An accounting firm onboarding a company client collects a certificate of incorporation, a director ID and a shareholder register. Extraction checks that the names agree across the three documents, and the compliance officer reviews the completed file before the engagement starts.