KYC and AML
What is it?
KYC (Know Your Customer) and AML (Anti-Money Laundering) are processes and measures applied by financial entities to identify and get to know their clients, as well as assess the risks associated with their operations. These practices are essential for ensuring transparency in the financial system and preventing illegal activities like money laundering and terrorism financing.
The KYC process involves gathering and verifying relevant information about the customer, such as their identity, professional or business activity, and the origin of their funds. With this data, institutions can evaluate whether there’s a potential risk of fraud, money laundering, or other financial crimes.
On the other hand, AML includes a set of procedures aimed at detecting, preventing, and, when necessary, reporting suspicious transactions. This involves continuously monitoring transactions, analyzing behavior patterns, and the obligation to report any signs of unusual or suspicious activity to the relevant authorities.
Key aspects to consider
The KYC and AML processes are crucial for ensuring transparency and security in financial markets. Thanks to their application, financial entities not only comply with current regulations but also help protect both their clients and the overall financial system. Financial institutions are subject to strict obligations in identity verification and transaction monitoring, which helps prevent their services from being used for illegal purposes.
While these procedures can sometimes be tedious or inconvenient for clients, they are essential for minimizing the risk of criminal activity and strengthening trust in the financial system, both nationally and internationally.