Skip to main content
KYC

KYC

KYC stands for Know Your Customer or Know Your Client - and is a requirement imposed on certain financial companies and financial services in order to comply with anti-money laundering law requirements.

KYC is basically a process where a company must obtain and verify the customer's general information and identity - and perform a thorough risk analysis/risk assessment of the customer relationship.

If you've recently changed banks, visited an accountant or bought a house - you've no doubt been asked for your driver's license or passport - and been asked to answer a number of questions. This has been a KYC process, from the accountant, bank or real estate agent.

In Denmark, there are no Danish translations of KYC, but in practice, people often choose to simply use the abbreviation. 

KYC is an important part of Anti-Money Laundering (AML) legislation.

Why perform KYC?

KYC is about knowing your customers, knowing their payment patterns and knowing the risk of having the customer.

Because if you handle, manage or otherwise assist private individuals or companies with their financial transactions, there could theoretically be a risk that your company or service is involved in, or part of, being misused for terrorist financing or money laundering.

That's why it's important that you know your customers, their transactions - and, not least, understand the risk involved in the customer relationship.

Read also: KYC process

Who is subject to KYC?

Individuals, companies and services subject to the Money Laundering Act are also subject to KYC. Persons and companies subject to the Money Laundering Act are basically institutions that handle, manage or are otherwise in close contact with the financial transactions of others - such as banks or real estate agents.

Companies covered by KYC are for example:

  • Bankers
  • Bookkeepers
  • Auditors
  • Financial advisors - including tax advisors
  • Lawyers
  • Mortgage banks
  • Real estate agents

See who else is covered by the Money Laundering Act in chapter 1, section 1 of the Money Laundering Act.

Relevant legislation

For relevant KYC legislation, you should take a closer look at the Danish Act on Measures to Prevent Money Laundering and Terrorist Financing - commonly referred to as the Money Laundering Act.

Implement KYC even if you're not covered by KYC

As a debt collection company, we know all about the importance of KYC - and not least knowing your customers.

Therefore, we always recommend that you run a background check on your customers - especially if you provide credit, loans or otherwise have financial dealings with them.

Even if your company is not subject to the KYC requirement, it might still be interesting to know your customer's accounting figures, who is behind the company - and what industry they are in.

Because with a background check on your customers, you can make better decisions on things like credit periods and credit sizes.

At Collectia, we have developed Qatchr - which can help with KYC - whether you are subject to the extensive regulations or not.


Free material

Subscribe to the newsletter


Latest posts