KYC process

A KYC process covers the actions that a company must go through in relation to KYC.

In section 11 of the Money Laundering Act, the KYC process is called "Know Your Customer procedures", but in everyday speech it is often referred to as KYC or KYC process.

What is KYC?

KYC stands for "Know Your Customer" and is about verifying your customers' identity, knowing their risk level and gaining sufficient insight into their financial activities and relationships.

With KYC, the company must gain sufficient knowledge of its customers, including ensuring that the customer is actually who he or she claims to be.

KYC helps to minimize and limit money laundering and ensure that the company is not misused for such purposes.

In Denmark, a wide range of companies and industries are subject to mandatory KYC actions, including banks, lenders, insurance companies and real estate agents - companies that handle large sums of money in connection with customers' financial affairs.

At Collectia, we believe that more companies should apply KYC principles, especially if you want to limit losses on debtors.

KYC is regulated in the AML legislation (Anti-Money Laundering).

Read more about AML here.

The process around KYC

In most banks, insurance companies and real estate agents, the KYC process is anchored in a system with a series of predefined questions that the customer must answer before signing up.

When the customer is created, the company must verify that the customer is who he or she claims to be - for example, by obtaining ID in the form of a driver's license or passport.

In addition, information about nationality, full name and CPR number (national identification number) must be obtained.

After this, a risk assessment of the customer must be performed, including whether the customer is politically exposed (PEP) or on a sanctions list.

It must also be assessed whether the customer operates or owns a business that may be at risk of financing terrorism or otherwise acts in a way that creates suspicion of money laundering or tax evasion.

In addition to creating a new customer, the company also undertakes to continuously monitor the customer's activities and information.

Legislation related to KYC

The primary legislation related to KYC is the Money Laundering Act, especially Section 11 of the Money Laundering Act.

In §11 you can read more about the KYC procedures required by law.

Of course, we recommend that you keep yourself updated if your company is subject to the provisions of the Money Laundering Act.

Violations of the Anti-Money Laundering Act have historically resulted in large fines for non-compliant companies.

Get help with your KYC process

Collectia has developed an online platform for credit checks - Qatchr.

Qatchr makes it easy for businesses to run credit checks on individuals and companies, including validating names, addresses, ownership etc.

Qatchr can be used as an active part of your KYC process. Read more about Qatchr here.