Kyc Registration Requirements and Compliance

To complete a KYC registration, you'll need to provide identification documents such as a passport, driver's license, or ID card.

These documents must be issued by a government agency and contain your name, date of birth, and a photo.

The name on your ID must match the name on your account, so make sure they're identical.

Your identification documents must be valid and not expired.

A unique perspective: What Are Kyc Documents

KRA stands for Kenya Revenue Authority, the body responsible for collecting taxes and other revenue in Kenya.

The KRA is a semi-autonomous government agency, established by the Kenya Revenue Authority Act of 1995, which is responsible for managing and collecting revenue on behalf of the government.

The KRA's main objective is to collect revenue efficiently and effectively, which is essential for the country's development and growth.

KYC, or Know Your Customer, is a mandatory process that banks use to identify and verify a client's identity when opening an account and periodically over time.

Banks must ensure that their clients are genuinely who they claim to be, and may refuse to open an account or halt a business relationship if the client fails to meet minimum KYC requirements.

KYC checks are a crucial part of maintaining the integrity of financial systems and preventing identity theft and financial crimes.

The Role of KRA in KYC is a crucial one. KRAs, or Know Your Customer Registration Agencies, are registered under the SEBI Regulations, 2011.

These agencies maintain KYC records on behalf of intermediaries registered to do business in the public space by the market regulator. This is a big responsibility, and it's essential for ensuring that client information is accurate and up-to-date.

To aid this function, financial intermediaries like mutual funds perform the KYC on investors and provide the details to the KRA. This way, the process of verification doesn't have to be repeated when the client approaches an intermediary for investment.

Take a look at this: Connaissance Client Kyc

Here are the registered KRAs with SEBI:

By registering with a KRA, clients can avoid the inconvenience of providing documentation every time they apply for a service with an intermediary. This saves them time and hassle, and it also saves the intermediary huge amounts of physical and virtual space.

Registering your KYC details with an agency has numerous benefits, making it a convenient and efficient process for both clients and intermediaries.

It facilitates the passage of critical information through a single channel, avoiding duplication of information and ensuring accuracy. This is because all the information is stored in a single database with limited access to retrieve and modify.

This saves clients from the inconvenience of providing documentation every time they apply for a service with an intermediary. They no longer need to repeat the process, making it a more streamlined experience.

The intermediary also saves huge amounts of physical and virtual space since documents no longer need to be stored on company resources for new clients. They can simply contact the agency to verify the client information.

Worth a look: Kyc Process Steps

In fact, the KYC process is crucial for preventing and identifying money laundering, terrorism financing, and other illegal corruption schemes. Banks must comply with KYC regulations and anti-money laundering regulations to limit fraud.

Failure to comply can result in heavy penalties, with a cumulated USD26 billion in fines levied in the U.S., Europe, the Middle East, and the Asia Pacific over the past ten years (2008-2018). This is a significant amount, and it's essential for businesses to comply with KYC regulations.

To put this into perspective, criminals are laundering between $1.6 to $4 trillion annually, which is 2 to 5% of global GDP. Stricter KYC/CDD processes are helping to stop this, making it a crucial aspect of financial services.

Here are some key statistics on the importance of KYC compliance:

KYC compliance is not just about avoiding penalties; it's also about ensuring the integrity of the financial system. By verifying the identity of customers and assessing risks, businesses can provide a secure and trustworthy service.

The registration process for KYC is a crucial step in verifying a customer's identity. Identification is the first step, where you'll be asked to provide personal data such as name, date of birth, and address.

To make it easier, you can think of it like filling out a form with your basic information. You might also be asked to provide proof of address, such as a utility bill or bank statement, to verify that you actually reside in the country.

The liveness check is the next step, where you'll be asked to undergo facial biometrics authentication to confirm that you're a real and living person. This is usually done through a secure online platform or a mobile app.

You'll also need to provide documents to verify your identity, such as a passport or ID card. Make sure these documents are authentic and current, as this will be checked during the verification process.

Here are the KYC steps in order:

The risk scoring step determines the risk category of the customer based on the results of the previous checks. This will help businesses adjust their approach to the customer's verification accordingly.

Worth a look: Know Your Customer Uk

To register for KYC, you'll need to provide certain documents. A government-issued ID is typically required as proof of identity. This can be a driver's license, birth certificate, social security card, or passport.

In some cases, two forms of ID may be requested. You may need to provide a photo ID and a document confirming your address. This could be a utility bill or a bank statement.

If you're opening a corporate account, you'll need to provide additional documents. This includes Social Security numbers and copies of a photo ID and passports for employees, board members, and shareholders.

Compliance is a crucial aspect of KYC registration. It's essential to understand the rules and regulations that govern KYC compliance.

FINRA Rule 2090 requires broker-dealers to use reasonable diligence when opening and maintaining client accounts. This means knowing and keeping records on the profile of each customer, as well as identifying each person who has the authority to act on the customer's behalf.

Worth a look: Know Your Customer News

KYC compliance consists of multiple steps, including customer identification and verification. This involves gathering information and verifying customer data, and comparing it against information provided by the customer.

The Anti-Money Laundering (AML) Directive in Europe has brought new challenges for financial institutions. The enhanced version of the fifth AML directive (AMLD5) requires financial institutions to improve their understanding of customers and minimize risk.

Here are the key components of KYC compliance:

Financial institutions must also maintain current and accurate customer information and continue to monitor accounts for suspicious and illegal activities. This is in line with the requirements of the U.S. Financial Crimes Enforcement Network (FinCEN).

Digital verification is a game-changer for businesses, especially in the financial industry. 64% of primary checking account openings in the United States were done online in Q2 2020, and this trend is expected to continue.

Financial institutions can leverage digital verification to streamline the customer onboarding process, conduct further due diligence, and review for Politically Exposed Persons (PEPs). This process involves verifying that an identity document is genuine and authenticating the document holder through biometric checks.

Suggestion: Digital Onboarding Kyc

A digital ID verification process can automatically capture customer demographic data, which can be integrated into enterprise systems like CRM. This helps to review for PEPs and maintain records on transactions and information obtained through Customer Due Diligence measures.

Financial institutions must maintain records on transactions and information obtained through Customer Due Diligence measures for all new and existing customers based on materiality and risk. This includes capturing customer demographic data and integrating it into enterprise systems.

A digital ID verification process can be completed through various means, including visual ID checks, digital verification, and biometric checks. These checks can be done online or through mobile channels, making it easier for customers to complete the verification process.

Here's a breakdown of the benefits of digital verification:

Client identification is a crucial step in the KYC registration process. It involves verifying a customer's identity to establish their essential personal profile.

In the US, financial institutions are required to conduct a Customer Identification Program (CIP) as part of the BSA/AML compliance program. This program requires financial firms to obtain four pieces of identifying information about a client.

For your interest: Kyc Program

The CIP requires that financial firms obtain four pieces of identifying information about a client, including name, date of birth, address, and identification number. This information is essential in verifying the customer's identity.

To identify customers, financial institutions can use various documents such as a passport, voter's identity card, driving license, Aadhaar letter/card, NREGA card, or a letter issued by the National Population Register. Any one document can be used as proof of identity and proof of address.

Here are some examples of documents that can be used for proof of identity and proof of address:

In some cases, financial institutions may use digital verification processes to verify a customer's identity. These processes can involve facial or fingerprint checks, as well as the use of advanced document verification software.

KYC registration agencies must store client documents safely and securely, making them available for immediate retrieval when needed. This ensures that sensitive information is protected and easily accessible.

To comply with regulations, agencies must store original client documents in both physical and electronic form. This dual approach ensures that information is secure and easily retrievable.

In the event of an update to a client's KYC information, the agency must notify all intermediaries involved in providing investment services to the client. This ensures that all parties have access to the most up-to-date information.

Here are some key requirements for KYC registration agencies:

The KRA regulations issued by SEBI in 2011 guide the functions of KYC Registration Agencies.

To ensure client documents are safely stored, agencies must store them in both physical and electronic form.

The agency must issue a letter of confirmation to the client and the status of KYC verification after receiving documents from the intermediary.

Agencies must have a well-woven network for smooth exchange of information among registered KRAs.

Here are the specific requirements for the network:

To prevent unauthorized access, KRAs must have built-in checks and take precautionary measures along with regular audits of the systems.

Agencies must ensure that any data provided by investors is not lost, destroyed, or tampered with, and have sufficient backup of all electronic records available.

KRAs must store the original documents of the client supplied by the intermediary in physical as well as electronic form.

Here's an interesting read: Electronic Kyc

Regulations globally can be complex and varied. In Germany, businesses must conduct video interviews with customers in certain cases, in addition to document-based verification.

The requirements for identifying and verifying customers differ from one jurisdiction to another. In the UK and many other jurisdictions, there’s no requirement for video interviews.

Germany stands out for its strict approach to KYC checks. Businesses in Germany must conduct video interviews with customers in certain cases.

The lack of video interview requirements in the UK and many other jurisdictions makes it easier for businesses to comply with KYC regulations. However, this doesn't mean they can be lax in their verification processes.

In some jurisdictions, the list of mandatory KYC checks may differ significantly. Businesses must be aware of these variations to ensure compliance.

For another approach, see: Aml Kyc Requirements