The initials KYC stand for Know Your Customer. Although multiple sectors apply the KYC and AML procedures, the practices are especially critical in the financial and banking fields. The KYC practices enable an institution to understand the identity of its clients. The banks and other financial institutions adhere to KYC procedures as a way of complying with the law.
The KYC practices minimize the likelihood of financial institutions working with people of questionable integrity such as terrorists, money launderers and others. Through the application of KYC, institutions like banks can verify the identity of clients through the info the latter offer before providing them with a service. Keep reading to find out areas where KYC is mandatory and how you can evade it through specific payment modes.
KYC in Finance
Although KYC is a critical procedure in many institutions, the practices are especially essential in financial institutions. This is because there are set regulations that govern how the entities should identify their clients. A KYC procedure in the financial institutions entails the following key aspects:
Customer Identification Program (CIP)
The financial institutions must establish criteria of knowing whether clients are who they say they’re. Due to rampant cases of identity theft, financial institutions are obligated by law to ensure that they verify the identity of clients before offering them services.
In line with CIP, for instance, banks are required to ensure that before they open an account for a client, the customer must provide information like their name, address, date of birth, and identification number. After giving the personal information, the financial institutions must check with the relevant bodies to verify that the information the client offers is accurate. Various jurisdictions have organizations that keep individual information. The financial institutions should countercheck the data of the client against the one held by these organizations.
Customer Due Diligence
Customer Due Diligence (CDD) is a procedure used by a financial institution to determine whether a particular prospective client is trustworthy. The method helps the institutions to minimize risks from illegal groups such as terrorists, money launderers, and politically exposed persons (PEP). Although customers could observe no verification cases at UK online casinos or any other institution, it is absolutely important to perform this process. Due Diligence has three levels, namely: Simplified Due Diligence (SDD), Basic Customer Due (CDD), Diligence, and Enhanced Due Diligence (EDD). SDD takes place in situations where financial risks involved are low. Such cases do not demand full mounting of SDD. In CDD, all information about a client is obtained and evaluated to check their identity and find out the risks associated with them. For clients with elevated risk levels, EDD data is obtained to offer a comprehensive understanding of client activities. Although EDD risk factors are elaborated in each country’s laws, each financial institution should evaluate the unique risks that clients may pose to their business.
Ongoing monitoring
After obtaining data about a client, you don’t stop there, but you should keep monitoring their financial activities. You can monitor client activities through various transactions in their accounts. As an ongoing monitoring strategy, you should keep an eye on different aspects such as an increase in a client’s operations, negative publicity in the media, and cross-border activities.
Avoiding KYC
Although KYC is a critical aspect of any financial institution, some situations may compel you to avoid it without annoying it. This is especially when making payment for specific online casino games that you may be playing. Surely, you may not be comfortable to go to a bank and start filling out lengthy forms when you want to fund your casino account.
There are various payment methods that you can use when you want to evade KYC procedures. Two critical ones include the use of Trustly Pay and Play and the application of cryptocurrency. Bettors using Pay N play can start playing games within no time by quickly funding their lottery account from their bank account. Such punters avoid going to a bank to fill out long KYC forms. Pay and Play, which is powered by Trustly, enables the player to make quick withdrawals and doesn’t require any registration. The method is also critical to merchants because it enhances client acquisition rates, boosts an abettor’s loyalty, and enhances safety and compliance.
Traders using cryptocurrency can also make a payment without filling in KYC forms. You can sell your bitcoin in the marketplace through various payment processors and standard financial institutions.