What is the Know Your Customer (KYC) Rule?
Know your customer goes beyond basic identity verification and includes the assessment of fraud risk in new and existing customer accounts. Financial instituions are required to incoporate risk-based procedures and provide detail about products, portfolios, acquisition channels, ect. Institutions should have processes to monitor customer transactions and detect potential financial crimes or fraud risk. KYC policies help determine when suspicious activity reports (SAR) need to be filed with the Department of Treasury's FinCEN organization.The following organizations have KYC oversight: Federal Financial Institutions Examinations Council (FFIEC), Federal Reserve Board, Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC), and the Consumer Financial Protection Bureau (CFPB).