AML and KYC impact on regulated and non-regulated firms

Know Your client (KYC) is a specific process under the broader umbrella of anti-money laundering (AML) regulations and refers to the procedures that financial institutions and businesses must follow to verify the identity of their clients. This process typically involves collecting personal identification information such as name, address, date of birth and ID verification documents, and the primary goal is to ensure that customers are who they claim to be and also to assess the risk they may pose to the institution. According to research firm, Forester, the cost of financial crime compliance in Australia, China, India, Japan and Singapore alone is approximately US$45 billion a year. As such, AML refers to a set of laws, regulations and procedures aimed at preventing criminals from disguising illegally obtained funds as legitimate income. It encompasses a much broader scope than KYC, including policies to monitor transactions, reporting of  suspicious activities and ensuring complianc…