Many companies that are described as financial institutions are required to implement the Customer Identification Program under the PATRIOT Act. At times, people and businesses may think that it is only banks that are needed to follow the know your customer rules. However, this may not be the case. There are many institutions and companies that should adhere to these rules as defined by the Bank Secrecy Act. It is therefore important for people to know, which institutions may require them to clarify, verify, and authenticate their accounts.Below are some of the companies that should follow the KYC rules:
Banks and other financial institutions
Identity theft and other malicious activities related to transfer of money are commonly witnessed in financial institutions like banks, credit unions, and financial investment companies. Through the Customer Identification Program, these institutions can minimize the chances of fraudulent activityby requiring clients to clarify, verify and authenticate before opening an account. Institutions should review the rules as put forward under the PATRIOT Act and make sure they are implemented strictly.
Insurance companies also face the problem of illegal money transfers. In order for these companies to protect themselves and their clients, they too should properly clarify, verify and authenticatecustomers through the Customer Identification Program.
Dealer in precious metals
Another institution that is targeted by criminals, are dealers. Often, dealers in precious metals tend to handlelarge amounts of money. Money laundering, finance terrorism, or other illegal activities often take place in this type of institution.
Travel agents, casino, check cashers, pawnbrokers, and brokers and dealers in bonds and securities are also required to follow the KYC rules.Customers should be notified regarding the requirement to prove youridentity. The notice may be sent in different ways including posting, company website, lobby area or included within the documents when you open an account. Depending on the institution, identity verification and authentication can vary from one company to other.
To minimize fraud and crime activitiesinstitutions need to be compliant with the law while at the same time protecting your business, you may want to follow know your customer rules. Other safety considerations include standardized data collection, which is used to countercheck against details of new account holders. Ultimately it is up to the customer to know which institution require clients to clarify, verify, and authenticate their accounts.
- January 31, 2023