KYC - Know Your Customer

Definition
Know Your Customer (KYC) is the process through which a bank verifies the identity of a client, understands the nature of their activities, and assesses potential risks before and throughout the client relationship. It is a regulatory requirement designed to prevent money laundering, terrorism financing, and other forms of financial crime.

Context
KYC sits within the broader Client Lifecycle Management (CLM) capability as the control layer that ensures each client is properly identified and risk-assessed. It differs from Customer Due Diligence (CDD) in scope and purpose—KYC establishes who the client is and why the relationship exists, while CDD extends to ongoing, risk-based monitoring and deeper checks (Enhanced Due Diligence) when required.

In an E-CLM operating model, KYC activities are executed through data collection, validation, and risk scoring workflows, linked directly to the entity record managed under Entity Management. Within CNRM, KYC data contributes to network-level insight, revealing how risks propagate across connected clients and relationships.