Glossary
KYC (know your customer)
KYC is the process of verifying who a customer is and understanding their business before and during a relationship with them.
KYC (know your customer) explained
Know your customer is the front door of an AML programme. Before an institution opens an account, issues a policy or processes a large transfer, it establishes the customer's identity from reliable documents or registries, understands what the customer does and what the relationship is for, and decides how much risk the customer presents.
KYC does not end at onboarding. Details go stale, businesses change owners and people take up public office, so the information is reviewed periodically, with higher-risk customers reviewed more often.
For example, a company applying for a loan facility would be asked for its registration details, the identities of its directors and owners, and an explanation of its trade, and those details would be checked rather than accepted on the applicant's word.
Why it matters in life insurance
Zambian institutions can now check an individual's NRC against the national registry and a company against PACRA and the ZRA taxpayer register, which turns KYC from document collection into verification. Keeping the evidence of each check is what a regulator inspects. ERMAML, the Ontech Risk & Compliance Suite, runs those registry checks at onboarding and re-screening, stores the documents in a versioned vault and schedules reviews by risk tier.
Related terms
CDD (customer due diligence) · EDD (enhanced due diligence) · Beneficial ownership · PEP (politically exposed person)