KYCC is a great way to protect your business’s reputation and protect itself against financial crimes.
KYC (Know Your Customer) protocols are too common and are known by almost every regulated business. But, have you thought about the level of risks your customers’ customer present to your business? The type of products and services your customers provide will decide the type of customers they have. Based on the number of customers, you may face unique risks.
When you comply with the Know Your Customer’s Customer (KYCC) process, you can protect your business from potential threats that come up.
KYCC is an additional compliance method that businesses can employ. KYCC goes a step beyond ordinary KYC or KYB methods. It is the most similar to the Know Your Business (KYB), process. It involves you doing a close analysis of our business’s customers.
With KYCC, you have to evaluate your business clients. You have to go past your business’s clients and see who they work with. Based on your customer’s customer base, your business could be exposed to new and unique threats.
The primary goal of KYCC is to:
KYCC measures can protect your business, customers, and the economy against tax evasion, terrorist financing, money laundering, etc. Without proper regulations, these crimes can grow at an alarming pace.
KYCC procedures are not widely regulated across the globe currently. But, these regulations are becoming a standard. The 5th and 6th Directives in the EU and FinCEN have indicated a deepening interest in KYC, risk, and compliance.
As new regulatory bodies continue to understand the importance of KYCC, it’s expected new regulations will soon be announced. If customers discover your businesses have facilitated illegal activity, it’s going to hurt your reputation. When you implement KYCC protocols, you’ll be able to identify these issues and reduce the level of risk associated.
KYCC is more crucial for high-risk industries, such as finance. That said, any business can benefit from the reputational benefits of KYCC.
What Does KYCC Look Like?
KYCC looks a lot like KYC. The only big difference is that you have to verify your customers’ customers. Similar to KYC, there are some basic steps in KYCC:
To begin KYCC, you’ll first need to ask your customers to provide a list of their customers. If they’re not comfortable sharing this information or are hesitant to share it, you may have to teach your customers about the benefits of KYCC.
When you have the information, you’ll have to collect all the necessary information to do KYC checks on these individuals. To be able to perform KYC checks, you’ll need to collect information and data from multiple sources.
As your customers conduct business, they’ll add new clients to their list. It’s essential that KYCC becomes an ongoing process. This way, companies will be able to detect any suspicious activity as soon as possible.
Despite the efforts, a thorough KYCC process improves both your and your customer’s businesses. It helps businesses raise their reputational standards, establish improved compliance methods, and increase trust and safety.
You can protect your business by implementing KYCC measures. But, you should only do this if other compliance methods are already fulfilled. While the measure is not too important currently, in the near future regulatory bodies may come up with new regulations.
By implementing KYCC in place today, you can proactively protect yourself from financial crimes such as money laundering. You’ll also be able to protect your business against reputational risks and avoid legal troubles that come along.