KNOW YOUR CUSTOMER (KYC)

KNOW YOUR CUSTOMER (KYC)

KYC is the mostly popular in banking and financial institution system. KYC describes the process of obtaining, retaining and using information about the customer to identify his/her identity, to verify his/her residential address, sources of funds, wealth is understood and his nature of transaction.

The objective of KYC regulation is to prevent banks and financial institutions from being used intentionally or unintentionally for money laundering activities.

Importance of KYC

1. To prevent money laundering
2. To minimize operational as well as other risks
3. For better client protection
4. To maintain better customer relationship
5. For product design and targeting
6. To prevent any other banking fraud

KYC Procedure

• KYC form fill-up
• Personal interview and observation
• Collection of supportive documents
• Classification of customer (Low/Medium/High Risk)
• Regular Update

NRB guidelines on KYC

1. Prepare KYC policy including risk management and monitoring process
2. Customer identification
3. Customer acceptance
4. Ceiling of cash transactions
5. Monitoring of Cash transactions
6. Risk Management
7. Monitoring procedures
8. Verification of the submitted document
9. Prevention of records up to 5 years
10. Periodic reporting and loan disclosure
11. Submit transaction to NRB