Know your client to avoid business risks
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by: williamarticle
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Word Count: 520
Date: Tue, 18 Oct 2011 Time: 7:37 AM
Know your client- as the name itself suggests refers to a process where a bank or financial institution that is responsible for checking all the details of the customers like their identity, background and various other aspects of their background. Know your client is also known as KYC which want an organization to get hold of identity of a customer at the initial stage of communication and it is important for them to keep record of all the proofs till the time they are in touch with the customers. According to the parameters of the legislation, an organization is also responsible to keep every data of their customer if the customer is in long term relationship. It is important to do because this way every activity of the customer can be addressed and easily handled and all this focus towards preventing any kind of crime related to finance.
There are a lot of criminals who try to do secrete sources of their money to keep them away from any kind of legal proceedings and money laundering is the term given by the financial system for such thieves and criminals. Anti money Laundering is the term and the action that is taken by banks and financial organizations against such illegal activities in order to thwart criminals so that they can’t use individual banks as their means to move on with their crime. Therefore all the financial organizations want to take strict actions and that’s how Know your client came in picture. If you have all the correct and adequate detailed information about your customer it will avoid any wrong decisions and it is important to review their data time to time to make sure whenever an activity of a customer changes, it’s there in your data. There is no such financial organization who wants to choke off any kind of rules and regulations and come across any kind of investigations against the law or any kind of costly fines. All the laws of financial organizations are established and organizations are following it because there is no such business who wants to make any kind of wrong decision be it any type of customer. If you adhere the rules of an effective know your customer process you can make sure that your business knows the foundation of everything that a customer brings to them.
The whole process gives two main benefits to an organization, firstly, a business firm is assure that they are not getting into any kind of risky situation where criminals are to launder the proceeds of Crime. Secondly, getting the detailed information and adequate knowledge of the customer’s supply of assets and their ability to sell product and their financial which are suitable and it helps both customers and the organization to make money. A service like know your customer gives you a lot of benefits and you can easily access a lot of information through various devices and systems which will allow you to keep a check on your customer’s actions their relationship with you during their stay.
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