KYC frequently asked questions
1. What is KYC?
Know Your Customer (KYC) – Is the process of a business verifying the identity of its customers. KYC enables Financial Institutions to know/understand their customers and their financial dealings to be able to serve them better.
2. Who is a customer of the Financial Institution?
For the purpose of KYC policy, a “Customer” is defined as:
- A person or entity that maintains an account and/or has a business relationship with the Financial Institution;
- One on whose behalf the account is maintained (i.e. the beneficial owner);
- Any person or entity connected with a financial transaction, which can pose significant reputation or other risks to the Financial Institution, say, a wire transfer or issue of a high value demand draft as a single transaction.
3. Why do Financial Institutions ask you for evidence of identity and proof of address?
The identification of a customer is a very critical part of an on-boarding process. It is critical because it seeks to protect the customer from fraudsters who may attempt to use the name, address and signature of a customer to undertake illegal business activities. Identification of customers also helps to control financial frauds, identify money laundering and suspicious activities, and for monitoring large value cash transactions.
4. What evidence of identity is required?
A valid evidence of identity (Driver’s license, International Passport, National ID Card or Permanent Voters Card)
5. What proof of address is required?
A recent utility bill (Water/Electricity /Telephone) or a recent bank statement dated within the last three months. NOTE: Online statements are not accepted.
6. My driver’s license has my address on it. Can I use my driver’s license for both evidence of identity and Proof of residence?
Unfortunately no, you may not use it for both evidence of identity and proof of address. However, where another valid evidence of identity is submitted, the driver’s license could be used as a proof of address.
7. Are KYC requirements new?
No, KYC requirements have always been in place and Financial Institutions have been taking KYC documents in accordance with the guidelines issued by their regulators (e.g. The Securities and Exchange Commission)
8. Is KYC mandatory?
Yes. It is a regulatory and legal requirement.
In terms of the guidelines issued by the Securities and Exchange Commission (SEC)’s Anti-Money Laundering and Combating Financing of Terrorism Regulation, 2013 on Know Your Customer (KYC) Standards, all Capital Market Operators are required to put in place a comprehensive policy framework covering KYC Standards and Anti-Money Laundering (AML) Measures.
The Money Laundering Prohibition Act, 2011 (as amended) requires Financial Institutions to ensure that they follow certain minimum standards on KYC and AML as laid down in the Act.