1273510,Anupriya,F1,Q7- KYC and Anti-Money Laundering? Your views?

KYC is known as Know your Customer, a term used for customer identification process. It involves making reasonable efforts to determine true identity and beneficial ownership of accounts, source of funds, the nature of customer’s business, reasonableness of operations in the account in relation to the customer’s business, etc which in turn helps the banks to manage their risks prudently. The objective of the KYC guidelines is to prevent banks being used, intentionally or unintentionally by criminal elements for money laundering.

KYC has two components - Identity and Address. While identity remains the same, the address may change and hence the banks are required to periodically update their records.

KYC Policy

Banks should frame their KYC policies incorporating the following four key elements:

•      Customer Acceptance Policy;

•      Customer Identification Procedures;

•      Monitoring of Transactions; and

•      Risk Management.

'Anti Money Laundering - AML'

A set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions. In most cases money launderers hide their actions through a series of steps that make it look like money coming from illegal or unethical sources was earned legitimately.

CONCLUSION

KYC is important to stop Money laundering can facilitate crimes such as drug trafficking and terrorism, and can adversely impact the global economy,for this Anti Money Laundering can help banks.