KYC is a banking and stock exchange regulation term for financial institutions and betting shops, as well as other companies that work with private money. It means that they must identify and establish the counterparty’s identity before any financial transaction can be carried out. This requirement extends to obtaining reasonably complete information about counterparties-legal entities, the nature of their business, and individual business transactions, for which the financial transaction is carried out. Such practices prevent money laundering, terrorist financing, and tax evasion. Currently, the requirements and standards aimed at implementing this principle are established at the level of national legislation, regulatory documents of banking regulators, and international organizations. Consistent implementation of the “know your client” principle has led to a gradual ban on anonymous bank accounts.
KYC is part of the AML (Anti-Money laundering) — the fight against money laundering obtained from illegal activities. AML is to monitor customer accounts to identify suspicious cash movements. It is used in banks, stock exchanges, poker rooms, and other financial companies.