Glossary
What is KYC (know your customer)?
Definition
KYC, or know your customer, is the process of verifying who a borrower is and whether they can repay before lending. It covers identity, address, income or business, references and the purpose of the loan, with copies kept on file. Many countries require it under anti-money-laundering rules.
Collecting documents is not KYC; verification is. Compare the ID with the person, check that names, dates and numbers match across documents, call the phone numbers and references, and visit the home or business for larger or riskier loans.
Apply more checks as risk rises, such as larger loans and first-time borrowers, and keep records for the period the law requires. Software stores the details and documents, but identity verification itself is a separate step that you or a specialist service must carry out.
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