The Meaning of KYC: Know-Your-Customer Compliance



Share on twitter
Share on linkedin
Share on facebook
Share on whatsapp

We often think the digital age is depersonalizing the client experience.

However, thanks to Know Your Customer (KYC) policies, opening any kind of account requires the service provider to know enough about their client to be able to identify them.

And while the onboarding process may appear cumbersome, KYC policies are what keep us safe from potential threats.

Below, we’ll walk you through the process so you can better understand the meaning of KYC and its benefits.

What is KYC?

In short, KYC stands for “Know Your Customer” (or “Know Your Client”), processes and guidelines through which finance companies can validate the identity of anyone using their services. But what is the meaning of KYC in compliance?

Financial institutions need to have at least two primary documents on file for each of their customers: a proof of ID and a proof of address. To process these, the institution will need to see an original version and be provided with a copy for their records.

As part of KYC measures, the financial institution will also monitor your transactions in the hopes of keeping you safe from risk.

Why we need KYC

The main reason to verify customer identity is to ensure that the financial institution isn’t vulnerable to fraud.

By adhering to Know Your Customer guidelines, banks (for example) can make sure that every monetary transaction originates from a legal source and is being used appropriately.

Regulations keep companies from playing a role in criminal activities.

Complying with regulations in a financial world

In layman’s terms, the meaning of KYC in compliance is keeping financial institutions and their customers safe. It’s the system of requiring a password to enter a speakeasy.

Also, KYC enables you to cancel your card in case of loss or theft. Because the bank can confirm you are the owner of the account, it can close it or keep the hacker from using it in the first place.

The greatest Achilles heel for up-and-coming FinTechs is sacrificing due process for a better user experience. New companies prioritize having a seamless customer journey to secure clients than checking all regulation boxes.

Money transfer operators and KYC requirements

Regulation laws aren’t always homogeneous, as is the case with the European Union. Each EU country has their own governing regulator and every country looking to do business with a neighbor must adhere to the compliance laws of all parties involved.

Money Transfer Operators (MTOs) must also comply with KYC requirements and run strategies at both sending and receiving ends, all while presenting a user-friendly system that incorporates all regulation policies.

To prevent criminal activity, financial institutions keep an eye on client transactions that exceed a predetermined amount. Inversely, MTOs control sending volumes by having a transfer maximum.

But, that’s just the tip of the iceberg when it comes to our compliance procedures.

Ria Money Transfer’s relationship with KYC

At Ria Money Transfer, we understand the meaning of KYC. To even begin using our services, the sender must provide us with a valid ID as well as the receiver’s contact information.

Once the funds are ready to be collected, the receiver must also present their proper identification.

After that, we put in place different KYC strategies—like video conference, bank ID and face biometrics—depending on the laws of each country and the Ria Money Transfer platform the customer is using.

Eduardo González Cristos, Ria’s Digital Business Development and Innovation Lead shared that, “When it comes to our products and services, we ensure they’re adaptable to the needs of each regulator, integrating state-of-the-art solutions into all our business processes. We have a dedicated team evaluating our products on the clock to guarantee our KYC methods are the perfect combination of tech, innovation and compliance.”

Thanks to our 30+ years in the sector, we’ve experienced the evolution of regulations first-hand and gained all the necessary insight to remain compliant with current Know Your Customer regulations, no matter how byzantine the rules of the game get. For example, our app includes features designed specifically to secure the access to your Ria Money Transfer account.

KYC requirements and compliance are a challenge for all, but it is one we take on diligently, with a dedicated team of experts keeping us at the forefront of regulatory technology.


Leave your comment

Your email address will not be published. Required fields are marked *