The 3 basic principles of KYC
When talking about classic KYC, three basic principles are often referred to: customer identification, customer due diligence and continuous monitoring.
To understand the customer, it is necessary to assess their activities and sources of funds and make decisions based on this information. What activities does the customer perform? Where do the customer's funds come from? Who does the customer receive money from and what types of transactions are performed? These are just some of the areas that need to be investigated.
Based on this information, banks, lenders and other parties can assess the risks of terrorist financing, money laundering and similar activities possibly associated with the customer.
KYC in private companies
When you have to show your passport or driver's license at the bank, real estate agent, accountant and the like, it's to ensure that you are the person you claim to be. This is a legal requirement. But while many other businesses are not subject to the stricter KYC rules, many private companies could still learn some of the basic principles.
Many companies often rarely know who they are actually doing business with: what is the customer's full name, where do they live and what are their financial circumstances.
For most businesses that have a lot of cash sales, for example, this information is rarely very interesting. But for businesses that occasionally have credit sales, it is relevant to know all information about the customer - especially if the customer at some point chooses not to pay your invoice. Because if you don't have the customer's full name, address, etc. it can be very difficult to collect your money - and thus, for example, get a debt collection agency to collect it.
For example, a debt collection company can't find an "Anders Andersen" in Brøndby.
In contrast, most debt collectors can find a person if you have a previously known address or the full current address. With Qatchr, you can look up a customer by social security number and validate if the customer actually lives at the address provided, as well as subscribe to the customer if they choose to move.
Credit rating and credit reports
While most companies may not immediately see the need to know the customer's financial situation, it's actually a good idea. If you extend credit to your customers, it's relevant to know if the customer has any known defaults, large debts, properties, etc.
Med Qatchr får du mulighed for at indhente kreditoplysninger til din kreditvurdering, dvs. få indsigt i både private og virksomheders økonomiske forhold, herunder kreditanmærkninger, regnskaber, ejendomme og lignende.
Subscribe to a customer
If you have an ongoing financial relationship with your customer, such as ongoing sales or credit, it's also beneficial to be able to subscribe to your customers.
By subscribing to and monitoring your customers, you will be notified when there are important updates regarding a customer, such as payment remarks, new debts, change of address, published financial statements, etc.
Get started with KYC in your business today
Even if your business is not currently subject to KYC requirements, you can already start applying some of the principles behind KYC using Qatchr. There are several good reasons for this:
- Risk management: By knowing your customers better, you can better assess risks, including the risk of fraud, loss and other adverse events. This contributes to more robust and secure business practices.
- Improved customer relationships: By understanding your customers' needs, activities and financial situation, you can create a more personalized and targeted customer experience. This can increase customer satisfaction and strengthen loyalty.
- Fraud prevention: A proactive approach to investigating and validating the identity and financial circumstances of customers can help reduce the risk of fraud and financial crime. This can protect your business from loss and damage to its reputation.
- Efficiency improvements: Implementing KYC principles can also help to optimize internal processes and workflows. This can result in increased efficiency and cost savings in the long run.
Overall, adopting KYC principles can help strengthen your company's position in the market, ensure its long-term sustainability and minimize the risk of unwanted consequences.
Protect your business from money laundering and terrorist financing today. All you need to do is fill out the contact form at the bottom of the page or give us a call, and we'll help you get started.
