I am sure you all must be pretty familiar with the term KYC. Every time one approaches the bank to open a bank account, the individual is first asked to get his/her KYC done. Hence, to open your bank account, you must cooperate with the KYC process first.
Not only while opening a bank account but at many other places as well such as while applying for a loan, investing, filling out some legal form, entering into any agreement, starting a business, etc., you are supposed to do KYC first.
Many of you might be wondering- what is KYC, KYC full form, or KYC meaning? What is the process of KYC? Well, well, don’t worry! That’s what this blog is all about. We have covered the basics of the KYC process and would ensure that you get familiar with the KYC registration process quite well until this blog completes.
So, without further ado, let’s get started with the KYC definition.
KYC is the process of identifying an individual or institution or corporation to prove their authenticity and citizenship. The full form of KYC is Know Your Customer.
The KYC verification process is mandated by the Reserve Bank of India that allows an individual or corporation to prove their identity and genuineness to others. Basically, the identity and address of the entity are ensured in a KYC process.
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KYC verification procedure is necessary because of the following reasons:
To verify the identity of the customer
To ensure that financial institutions are not being used to carry out money laundering activities or terrorism financing of any kind.
To understand the source of funds and the legitimacy of the business relationship.
Now that we have learned about what KYC is and why it is important, let us now move on to why we are really here. Given below are the steps to the KYC process or online KYC registration process:
In the KYC procedure, the very first step is to gather any personal information about the customer. The correctness or reliability of the information depends on the due diligence of the applicant.
The applicant must fill out an online KYC registration form on whatever portal or website he/she is willing to carry out financial transactions through.
Secondly, when the applicant’s information has been collected via a form, the applicant is then supposed to validate the information they put in the form with relevant documents indicating the same details.
These KYC documents must be uploaded in the form of scanned copies of the original documents onto the portal. The documents act as pieces of evidence demonstrating that the information provided by the user earlier isn’t fake and holds its relevance to date.
After the applicant has uploaded the documents as proof, the template for the documents is both examined and validated against several checks. Such a procedure is carried out to ensure that the document hasn’t been vandalized in any way.
Digital tampering of documents via photoshop might go unnoticed and undetected in the beginning by authorities. Hence, it’s this final step of document validation where the applicant’s application goes through for the digital KYC process.
The next step is data extraction from the documents submitted by the applicant. Data extraction could be carried out in two ways: a) either through the OCR, or b) Without OCR.
In the OCR method, the system extracts the applicant’s data directly from their documents such as identity proof and address proof. Then, it checks for anomalies in the information so it can determine whether the data is authentic or not.
In the method where the data is extracted without OCR, the applicant enters their information manually into the application’s portal. Then, the IDV solution of the system cross-checks the information provided by the applicant against the information present on the uploaded documents.
So, this was the KYC process for individuals. In case you don’t follow the process well or you provide any wrong information or tempered documents while the KYC registration process, you may have to suffer the consequences of KYC compliance.
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