KYC and Perpetual KYC are two important terms used in the financial sector, particularly in banking, investment and insurance. These terms refer to the process of verifying a customer’s identity and ensuring that they are not involved in illegal or fraudulent activities.
KYC stands for “Know Your Customer” and refers to the process of verifying the identity of a customer or client. This process is required by regulators in most countries and is designed to help financial institutions identify and prevent fraudulent activity, money laundering and terrorist financing. The KYC process involves collecting detailed information about a customer’s identity, including name, address, date of birth and other personal details. The information is verified through various means, such as documents like ID cards, passports and driving licences, as well as through database checks and reference checks.
Perpetual KYC, also known as “pKYC”, is an extension of the KYC process. It involves continuous monitoring of information about a customer over time, not just during the initial onboarding process. The purpose of pKYC is to ensure that customer information is up-to-date and accurate and to identify any changes that may indicate potential fraudulent activity. The pKYC process involves continuous monitoring of a customer’s identity, such as changes to their address, place of employment or other personal details. It also includes continuous monitoring of their transactions and financial activities to detect any unusual or suspicious activity.
The pKYC process is important for financial institutions as it allows them to maintain a high level of customer due diligence and reduce the risk of financial crime. By continuously monitoring customer information, financial institutions can identify potential red flags and take appropriate action to prevent fraudulent activity.
In conclusion, both KYC and pKYC are essential processes that help financial institutions verify the identity of their customers and mitigate the risk of financial crime. While KYC is a one-time process, pKYC is an ongoing process that involves continuous monitoring of customer information over time. Both processes are important to maintain the integrity of the financial system and to ensure that customers can transact with confidence.
