• Here are the key points in this module:

•
o KYC is a phrase that means "know your customer." Customers' authenticity is
ensured through KYC procedures, which verify their identity to assess danger.

o Due to KYC and AML regulations, businesses must check their customers before
onboarding them.

o When obtaining KYC information using a risk-based approach, there are four
primary objectives to consider: identify the customer, verify the client's true
identity, understand the customer's activities and source of funding and monitor
the customer's activities regularly.

o According to global regulatory authorities' regulations, companies worldwide are

expected to conduct extensive identity-checking on their clients to prevent
financial crime on an organisational and international level.

o The primary benefit a firm can get by following KYC compliance is avoiding huge
fines. A few other benefits are as follows: fraud prevention, regulatory
compliance, secure customer onboarding and customer Retention, credibility and
Growth.
o The entire identity verification procedure encompasses a lot; however, the most
important ones are the customer identification program, customer due diligence
and ongoing monitoring.

o In the KYC procedure, CDD is classified into three categories depending on the
level of risk associated with each person. For example, a person exposed to PEPs
(politically exposed person) may require a more thorough screening than regular
account holders with low transaction levels: simplified customer due diligence or
CDD, standard due diligence or SDD and enhanced due diligence or EDD.
• The KYC verification process consists of the following steps: the collection of
information, asking the user to upload a piece of evidence and verifying the information.

• There are two methods for collecting data from documents: data extraction via OCR, in
which the device automatically extracts data from an identity document and verifies the
information's validity and data extraction without OCR in which the user manually enters
the information and the IDV solution checks the user-entered information against the one
present on the identity document.

• If the customer represents a higher risk, the financial institution should carry out a more
extensive Enhanced customer due diligence procedure.

• Customer Due Diligence means verifying who customers are. Risk factors can include
customer and geographic risk factors.
• The following types of transactions are risk indicators: private banking, anonymous
transactions, non-face-to-face business relationships and receiving payments from
unknown third parties.

• Money laundering involves the procedure by which criminals conceal, manage, spend
and benefit from the proceeds of their illegal activities.

• There are three main stages of a money-laundering operation: placement, layering and
integration.

• The predefined process of company-specific AML compliance measures is referred to as

an AML compliance program.
• AML monitoring enables financial firms to determine risk by monitoring customer
transactional history continuously.

• Client onboarding for AML is the first step in establishing a relationship between a
customer and a financial institution.

• AML client onboarding process includes: collecting personal information, verification

through sanction lists and dispatching results.

• When you conduct identity tests on a client who is not physically present, it is necessary
to do 'Enhanced Due Diligence'.

• The Gambling Commission supervises casinos and online gaming. The Financial
Conduct Authority monitors the banking and financial sectors (FCA).

• Everyone in charge of using personal data must adhere to strict rules known as "data
protection principles."

• Financial institutions are expected to conduct three due diligence steps under the
amended 2017 AML regulations, which include: identifying and validating the customer's
identity using documents, information, or records gathered from a trustworthy and
independent source. Identify any beneficial owners (where applicable) and validating
their identities on a risk-based basis. Obtaining details about the objective and intended
nature of the business relationship and the source or origin of funds. Often, do enhance
due diligence on Politically Exposed Persons (PEPs), focusing on the origins of their
money.