What Is KYC?

KYC (Know-Your-Customers) is a basic idea of verifying identities using documentation and making sure they are real. It also verifies whether a specific person is on prohibited lists.

Following KYC compliance can help organizations to verify risks associated with a person. It can even prevent money laundering, terrorist financing, and other small-scale frauds at bay. We at DIRO, help organizations maintain a balance between full proof KYC compliance while reducing friction in customer onboarding.

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What Is KYC?

KYC (Know-Your-Customers) is a basic idea of verifying identities using documentation and making sure they are real. It also verifies whether a specific person is on prohibited lists.

Following KYC compliance can help organizations to verify risks associated with a person. It can even prevent money laundering, terrorist financing, and other small-scale frauds at bay. We at DIRO, help organizations maintain a balance between full proof KYC compliance while reducing friction in customer onboarding.

The Basics of KYC

KYC laws came into existence as a part of the Patriot Act, which was passed after 9/11. The main purpose of KYC is to do identity verification and understand terrorist behavior.

A part of the Patriot Act requires banks and other financial institutions to meet two requirements for KYC compliance.

  • Customer Identification Program (CIP)
  • Customer Due Diligence (CDD)

Customer Identification Program (CIP)

CIP is simpler out of the two requirements of KYC compliance, it is also more familiar among institutions.

In CIP, a bank asks the customer for identifying information, each bank has its own CIP process so a customer may be asked for different things at different places. The most common identifying documents are a driver’s license or a passport.

Customer Due Diligence (CDD)

The second part of KYC is a bit more nuanced. While conducting due diligence, banks and other financial institutions try to predict the types of transactions a customer will make. This helps them in detecting suspicious behavior, assign the customers a risk rating that will determine how much and how often an account is monitored.

To fulfill CDD, banks may ask for a lot more information from customers in comparison to CIP. The information may include a source of funds, purpose of the account, occupation, financial statements, banking references, description of business operations, etc. According to the Patriot Act, there’s no standard procedure for conducting due diligence which means banks can use their own methods.

Following due diligence can help banks mark certain activities such as regular wire transfers, international transactions, and interactions with off-shore financial institutions. If an account is flagged as high risk, it’ll be monitored more frequently and the customer may be under a check.

With the help of DIRO’s award-winning document verification technology, banks can verify identity, balance, liabilities, transactions, income, investments, and assets with ease.

What’s the Need for KYC?

By verifying customer’s identities and intentions, banks can more accurately search for suspicious activities and mitigate risks.


Activities like money laundering, terrorist financing tend to rely on anonymously opened accounts. The increased strictness of KYC regulation has led to the increased reporting of suspicious transactions. While this doesn’t necessarily help in stopping the activities, it just helps banks and FinTechs to determine fraud and suspicious activities.

With time, regulations have been becoming stricter, which means financial institutions have to spend more to comply with these regulations. DIRO’s innovative document verification technology can help you reduce the cost for KYC and AML compliance and still provide brilliant results. We at DIRO can help you verify all kinds of documents available on a third-party web surface, which makes us one of the best platforms for document verification.

Reduce Operational Costs With DIRO

One of the most common ways of staying compliant with KYC regulations is by doing manual document verification. Some banks and financial institutions rely solely on manual document verification to fulfill KYC compliance. Maintaining and housing a team can be extremely expensive. DIRO helps you scale the operational cost, by providing brilliant document verification software that helps organizations to streamline the process to reduce your internal costs.

Using automated user consent, our document verification technology can verify any web-based document globally. Users can now verify documents in a secure browser in under 1 minute.

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