How KYC Protects You in The Financial Space
5 mins read
2 mths ago
It’s no news that when you are trying to open an account with a bank, mobile service provider, loan institution and more, they request specific details. These details include your full name, age, and proof of identification. You then wonder why you must be bothered to go through this sometimes strenuous process.
You are one of the millions of Ugandans who have the same question. KYC is usually a requirement for the company that you are trying to get their services, but how does it concern you? KYC is indeed a requirement, but then it is an integral feature that safeguards not only your security but the security of your assets. What then is KYC, and why is it important?
What is KYC?
KYC is an acronym for "Know Your Customer" or "Know Your Client." It is a mandated process of verifying the identity of customers to prevent Anti-money laundering practices. Today, KYC companies completed KYC through eKYC, which electronically verifies a customer's identification.
How KYC Protects Your Finances
People often define KYC as a regulatory requirement for companies and business institutions. Although, this much is true. Yet, KYC is integral for the security of the clients. Here’s how KYC protects you as a customer:
- Ensures your assets are secure.
A company that does not follow KYC procedures puts your assets in danger. Not completing KYC for its clients exposes the firm to money laundering or corrupt clients, placing its integrity at risk.
The firm may not only have to pay a fine but may face sanctions which include freezing all the company assets. With the company's assets frozen, you may lose your hard-earned funds if the issue remains unresolved.
- It opens you to other payment services.
KYC is essential for cross-border transactions which require trust among customers. This way, you can be sure that the firm has the identity of other customers. In the case of a fraudulent claim, the company traces the funds, you recover your funds, and the offenders get punished. It also allows you to enjoy credit opportunities as the firm can give the funds to you based on the trust they have earned from your identity.
- Ensures you can retrieve data in case of loss.
It is not uncommon to forget passwords or lose important information that allows you access to your funds. With KYC, the firm can use your data for quick account recovery.
KYC is integral for protecting your assets from risks. It may appear strenuous but is necessary for your security in the financial space, with no exceptions to the crypto space. Several crypto scams are taking different variations, which is why it is vital to use an exchange that is not only KYC compliant but employs security mechanisms to secure your assets.
At the same time, you must exercise caution when sharing your information with a third party to ensure that they are not exposing you to new risks. You can make inquiries as to why they need specific details before submission.
The KYC process doesn't have to be strenuous, which is why Yellow Card employs the best technology to make the KYC process as seamless as possible. With Yellow Card, you enjoy advanced security of your assets and cheap rates, designed in an easy-to-use and quick platform.
Disclaimer: This article is meant to provide general guidance and understanding of cryptocurrency and the Blockchain network. It’s not an exhaustive list and should not be taken as financial advice. Yellow Card Academy is not responsible for your investment decisions.