Blog Getting started KYC: What it is, why we do it, and why it’s here to stay

KYC: What it is, why we do it, and why it’s here to stay

date November 3, 2020 time 3 min read

If you have a MyConstant account, or you’re thinking about signing up, you’ll notice that we need to verify your ID and address (KYC).  

KYC stands for know your customer, and in the business and banking world, it’s a process that helps confirm your identity

As well as helping protect you against fraud, KYC checks help us comply with Anti-Money Laundering and Anti-Terrorism Financing regulations in the US. 

How did KYC begin?

Following the September 11th attacks, investigators discovered something worrying. Nearly $300,000 of the terrorists’ funding had been funneled through US and international bank accounts.

Which is why, after 9/11, the US and other countries began obtaining a more comprehensive profile of anyone with (or opening) an account.  

Since October 2001, under the Patriot Act, US-based banks, credit unions/cards, insurance agencies, and online P2P lenders (such as MyConstant) require customers to submit verifiable, personal information with their application. 

This information ensures that the customer is not involved in any financial misconduct, such as corruption, bribery, terrorist activity, or money laundering. 

Side note: In the US, KYC is often referred to in banking as the customer identification program (CIP). 

Guidelines that protect you 

You might be thinking that KYC sounds like a one-sided relationship – you’re releasing all your personal information with nothing in return. But it’s not! Think of KYC as a relationship builder between you and your financial institution: the guidelines protect both parties.  

KYC has made everything from identity theft to credit card fraud all the more difficult for criminals. Also, if a financial institution sidesteps any KYC guidelines, they may face penalties and fines. 

What is the KYC process?

When KYC first started, the process was completed manually (lots of paperwork), which meant the approval time could take weeks. Nowadays, KYC is processed online in 3 to 10 business days with many companies accepting photos of your documents (including us!).

To get a clearer idea of how KYC works, let’s take a look at its three main sections. 

  • Customer identification — This is the first step where you submit a picture of a valid ID (driver’s license or passport), your social security number, DOB, and proof of address. Keep in mind, the requirements might vary slightly between countries and companies.
  • Customer due diligence —  Now the financial institution is combing through your documents to make sure everything is in order. If a photo is blurry, or information is incorrect, you might be asked to resubmit. Otherwise, if there aren’t any ‘red flags,’ then your KYC will be approved.
  • Monitoring transactions — KYC is an ongoing process that doesn’t end the moment when you’re verified. Financial institutions monitor your transactions to develop a ‘risk profile.’ This profile includes your spending habits, unusual spending, overseas charges/transfers, or media attention. 

KYC requirements with MyConstant 

When you sign up with MyConstant, you’ll need the following: 

  • Proof of identity (ID card, drivers license, or passport),
  • Proof of address (phone bill, credit card, or bank statement), and 
  • A current picture of yourself holding your ID.
KYC in less than 5 minutes

When you reach the KYC page, you’ll type in your details, upload your photos, and click next. It should take no more than 3 business days for you to be verified (if you’re outside the US, it can take up to 14 days). 

Check out our step-by-step guide on how to complete KYC

Do you have more questions about KYC? Or want us to walk you through it over the phone? Please get in touch on [email protected] or call +1 646 809 8338 (Mon to Fri 9am-5pm and Mon to Thurs 7pm-4am PST).


Share this article

Trevor Kraus

Trevor Kraus

Tags:

Related Articles