Customer Identification Procedure
Customer identification procedures are a set of processes and controls which are used to identify and authorize a customer. Customer identification is the initial control measure undertaken by the banks, financial institutions (FIs) and organizations to verify the identity of the customer for onboarding, authorizing financial transactions and establishing business relationships. Customer identification is risk identification and mitigation control measure.
Customer identification plays a crucial role to ensure entities performing the financial transactions are verified. Customer identification also includes a risk assessment of customers and businesses to lay a building foundation for risk rating. Customer identification is critical for organizations to understand the inherent risk and nature of financial transactions. Customer identification is essential to curb money laundering, terrorist financing, prevention of fraud and other illegal criminal activities that disrupt the overall financial system.
Customer’s identity like name, date of birth, address, nationality, occupation and identification number are supposed to be collected, complied with recordkeeping requirements and updated as per internal policies and procedures. The information is then verified against evidence that could be in the form of biometric verification or document verification.
KYC Verification Process – 3 Steps to Know Your Customer Compliance, James Efron, 2019.