KYC: What Is It And Why Is It Important

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A lot of people, if not all, value their privacy. This is what some people do their best to stay as anonymous online as possible. However, certain services, even online, would require you to disclose your personal information for you to be able to use it. For that, there is a process called KYC.

KYC is used by banks, financial institutions, and even by legitimate online casinos in Australia that you can play on. But what is KYC, and how does it work? Here are some of the most important things you need to know about this identity verification process.

What is KYC?

The term KYC stands for “know your customer.” Most countries have enacted laws and acts that require financial institutions to have their clients undergo this identity verification process before proceeding to avail of their financial services.

KYC aims for institutions like banks, credit companies, insurance companies, trading companies, and the like to get to know their clients by having them disclose their personal information. This process is done to prevent any attempt of illegal activities such as fraud, bribery, terrorism transactions, and money laundering.

The data collected, in turn, are used and stored following the country’s or state’s data privacy laws and are not used in any way aside from the purpose of identity verification. This means that even though you disclose your basic personal information to these institutions, they have the responsibility to take care of your information and make sure it is not being used aside from the original purpose intended.

In ensuring security

In this day and age, sending money over and receiving it has never been so easy. Back in the day, you would need to physically give the money to another person. Now, you can transfer money electronically. With all these innovations, naturally, came opportunities for other people to exploit.

People who are into illegal activities such as illegal trade and money laundering resort to electronic means in transporting huge amounts of money. The process of KYC prevents banks and other financial services to be used in an illegal way, or for people to use money obtained illegally. Since personal data of the customer is always given, no one would dare use a legitimate service for any illegal activity.

What businesses use KYC?

The KYC process is being used widely in most, if not all, companies and services that revolve around the transaction of money. Here are some of the types of companies or services that make use of the KYC process.


Banks are one of the first businesses you can expect to implement KYC. They would require you to disclose your personal information right even before you open your account with them.

Even so-called “online banks,” or banks that operate completely online, are under the obligation to have you undergo the KYC process.

Investment and trading companies

Another type of institution that would need your personal information before you make any transactions with them and through them are investment and trading companies. They would need you to undergo the KYC process for them to ensure that not only you are a real person, but to also assess your risk management profile.

E-money wallets

Since e-money wallets work in a similar way like a bank--you put in money then you either use it for whatever propose or let it sit there and withdraw it later on--a KYC process is oftentimes required. Sometimes, you would need to provide documentation right before signing up.

Online casinos

In states and countries where an online casino is legal, singing up for an account is not as easy as providing an email and a username. Since you would be dealing with real money when playing in an online casino, you would be asked to provide KYC documents such as a government-issued valid ID.

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