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  • Writer's pictureAnna Stylianou

10 common mistakes performed by regulated entities when conducting KYC (Know-Your-Customer)

Updated: Jul 13, 2023



In today's global business environment, KYC regulations have become increasingly important for companies that engage in financial transactions.


KYC is the process of verifying the identity of a customer to ensure they are not involved in money laundering, terrorist financing, or other illegal activities.


However, despite the importance of KYC compliance, many regulated entities still make mistakes that can lead to severe consequences such as hefty fines, reputational damage, and legal sanctions.


In this context, here are ten common mistakes that regulated entities make when conducting KYC:


1. Not verifying the identity documents properly


2️. Relying solely on online searches for verification


3️. Not updating KYC records regularly


4️. Ignoring red flags or suspicious activity during verification


5️. Not properly train their employees to conduct KYC


6️. Not having a robust system to monitor and detect fraudulent activities


7️. Not maintaining adequate records of the KYC process and documentation.


8️. Not conducting KYC for all customers


9️. Do not apply EDD on high risk customers before establishing the business relationship


1️0. Conduct KYC manually with no use of appropriate tools.


By avoiding the ten common mistakes and improving their practices in KYC compliance, businesses can effectively manage their regulatory risk, enhance their customer relationships, and ultimately protect their bottom line.

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