The KYC process: why verify a customer’s identity?

The purpose of the KYC process

The KYC process consists of verifying the identity of customers and ensuring their compliance. It is an essential part of Treezor’s due diligence system. It contributes to:

• combating money laundering and the financing of terrorism
• compliance with tax regulations
• compliance with sanctions
• compliance with anti-corruption laws and regulations
• the prevention of identity theft
• protecting the customer’s interests
• protection of reputation.

An electronic money institution must therefore collect and analyse several pieces of information, hence the request made to customers to submit specific documents.

The institution must collect certain essential information such as*:

• Customer’s identity: last name, first name, postal address, e-mail, mobile phone number
• Legal documents: ID or passport + proof of address less than 3 months old
• For an individual: last name, first name, postal address, e-mail address, mobile phone number, a copy of a valid ID and proof of address less than 3 months old
• For a legal entity: a copy of an ID of the legal representative, the corporate registration certificate dated less than 3 months old and a copy of its articles of incorporation
• Live video to check that the documents are accurate and compatible
• Live video to check that the person wishing to open an account matches the documents provided

*Non-exhaustive list

Who is concerned by KYC?

The KYC process has evolved many times, especially due to the European payment services directives PSD1 and PSD2, which allow new players such as fintechs to access new services.

As a result, all financial players including banks, insurance companies, fintechs and electronic money institutions like Treezor are now affected by these regulations.

The issue of combating money laundering and the financing of terrorism (AML-CFT) has concerned all payment service providers since the directive of 26 October 2005. All of the proposals were taken up by the 4th Anti-Money Laundering Directive, known as Directive 2015/849, then by the 5th Directive of 30 May 2018 known as 2018/843.

Is KYC systematic?

Yes, KYC must be systematic in order to verify an account holder’s identity, starting at one euro spent and regardless of the transaction amount.

Why is KYC required?

Of course, the quick and obvious answer would be that this is a legal obligation. KYC is more of a security procedure. By extension, it allows all players in the financial sector to create a secure service for all businesses and individuals. As a customer, you are protected from identity theft or attempted embezzlement of your account.

Is the information collected securely?

For Treezor, information security is a priority. Our servers are encrypted and regularly audited by Information System Security experts. For more information on our privacy policy, click here.

In general, the sector is subject to the General Data Protection Regulation (GDPR) in force since 25 May 2018. This regulation guarantees the protection of your personal information. The information collected during the KYC process therefore remains confidential. The only exception is that authorities may access this information in the event of criminal proceedings. It is not possible for an individual or a company to request information about an account or its holder.

Key takeaways

• KYC is a procedure that applies to all players in the financial sector
• This procedure ensures a financial institution’s compliance with requirements to combat money laundering and the financing of terrorism
• KYC ensures customers’ security in the event of fraud
• The information collected is secure

Would you like to know more about Treezor’s KYC process? Click here.

Learn more about the different stages of the KYC process.

Find all our KYC articles on the Treezor blog here.