An Overview of KYC
KYC, also popular as Know Your Customer, is a personal identity verification process through which banks and financial institutions can authenticate the validity of an individual before providing them with any particular financial services. To complete this mandatory procedure you will need to submit KYC documents to the bank or the respective financial organization.
With the help of KYC banks and other financial institutions can effectively prevent instances of financial fraud, money laundering, cybercrime, financial terrorism, etc.
Initially, the manual KYC process was time and capital-intensive but with the arrival of eKYc or Online KYC, things have changed. Now the KYC process can be completed efficiently through the digital medium without consuming too much time and this process has also become feasible, cost-effective, and quick.
Documents required for KYC
The backbone of KYC is the OVD or Officially Valid Documents. The OVDs are documents that have the approval of the government and its representatives. For example, in India Aadhar works as the OVD of the Indian citizens. An OVD must include the identity proof and residential proof of the individuals.
The KYC documents required for proof of identity include:
- Tax identification card
- Driving license
- Government-issued identification documents
- Voter identity card
The KYC documents required for residential proof include:
- Any type of tax bill: municipal tax bill, property tax bill land ownership bill disclosing the residential address
- Rent agreement
- Bank statement attested by an authorized figure of the institution
- A letter from the employer stating the employee’s residential address
Four major exceptions related to KYC documents verification
1. For minors
If any bank or financial institution is accepting minors as their potential customer then the bank will also have to ask for the KYC documents of the parent/ guardian/ authorized representative who will be responsible for handling the minor’s accounts.
2. For convicted individuals
If the KYC applicant is a convicted individual then, they will have to provide a self-declaration attested by a high court judge or supreme court judge to authenticate the address of the applicant. With this particular document, the KYC documents verification for that particular individual will be rejected.
3. For Non-residential citizens
If any non-residential citizen is a KYC applicant then they must include their resident visa along with the other KYC documents, furthermore, these documents need to be verified and attested by a corresponding bank official, national assembly, magistrate, judge, notary public, embassy, etc. (anyone from the mentioned authoritative figures) from the country of residence.
4. For students pursuing higher studies
If you are a student who is pursuing higher education then you will also have to submit your official student identification card issued by the University or respective authorities. Your student identification card should also have the residential address written on them.
Furthermore, the college or university the student is studying in should be recognized by the university or the government of the country. Not to mention, an identification card issued by different professional authorities such as the medical council, council for chartered accountants, lawyers, etc. are also accepted as KYC documents.
If you want to opt for financial services then you must go through a KYC process. While you are at it, you also need to know about the exception in the case of KYC document verification. That way you can enjoy a smooth KYC document verification process without going through any discrepancies.
If you have opted for an online KYC documents verification then you will have to submit all the above documents digitally and for that, you also need to have digital copies of all the required KYC documents. With the online KYC process, companies can easily verify the applicant’s identity while measuring their risk status simultaneously.