What does "Know Your Customer" (KYC) refer to?

"Know Your Customer" (KYC) refers to a process for verifying the identity of clients to prevent fraud and maintain transparency. KYC is crucial in various industries, especially in banking and finance, where organizations must comply with regulations aimed at preventing money laundering, terrorist financing, and other financial crimes. By performing thorough KYC checks, companies can ensure that they are dealing with legitimate clients, thus safeguarding their operations and maintaining the integrity of the financial system.

Ultimately, KYC involves collecting information such as the client's name, address, contact details, and identification documents, which helps institutions assess potential risks and establish trust. The importance of KYC lies in its role in creating a safer environment for doing business, protecting both the institution and its customers from unlawful activities.