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).
According to the Federal Financial Institutions Examinations Council, a know your customer program should include:
Identity relationship management isn’t just knowing who a person is (or is not) or may (or may not) be at a particular point in time. It links people, places and things and enables a dynamic, context-based strategy that organizations can apply confidently throughout the User or Customer Life Cycle.
Trusted fraud and identity platform to monitor and spot suspicious transactions fast.
Implement robust identity verification to ensure you can confirm who you are doing business with.
Verify business and business owner application information to reduce commercial fraud and illegal financing.
The real cost of ID verification: CIP