KYC – What is it and why is it important?

What is KYC?

Know your customer (KYC), is a process of an identification of clients’ identity done by a business. The main goal of KYC is to evaluate potential risks of illegal intentions for business relationships with the clients.

Block Stocks is the platform connecting two types of clients: Investors (natural persons) and Startups and SMEs (incorporated companies). Since their legal status is different, we will introduce separate KYC processes for both customer types.

Block Stocks process of Investors’ KYC:

  1. Establish the Investor’s identity (proof of identity and address).
  2. Confirm the legitimacy of Investor’s fund’s source.
  3. Evaluate AML (money laundering) risk associated with the Investor.

Block Stocks process of Startups and SMEs’ KYC:

  1. Basic company data:
    – Company name.
    Legal form.
    – Country of incorporation.

  2. Corporate documents:
    – Certificate of incorporation (or legal document associated with the formation of the company).
    – Certificate of directors.
    – Proof of address and identity of directors.
    – Certificate of shareholders.
    – Memorandum of association (a legal document which formed the company).
    – Proof of address.
    – Financial Statement (most recent financial statement published).
    – Proof of address and identification of “beneficial owners” (shareholders holding more than 25% of the company’s equity).

Why KYC is important?

The main objective of the Know your customer process is to identify theft, prevent terrorist financing, money laundering and financial fraud. Our process will prevent Block Stocks from being used, intentionally or unintentionally, for money laundering activities.

Secondly, thanks to KYC, Block Stocks would also get a better understanding of its customers – Investors, Startups & SMEs – to provide tailored services and manage risk in a prudent manner.

KYC is a standard global practice in the financial industry. It’s required by the regulators with a goal to protect all stakeholders within the ecosystem. Thanks to an effective KYC process, the financial risk of business arrangements between Investors and Startups and SMEs in Block Stocks is significantly reduced.

You want to know more about “know your customer”? Then you will find more information here.

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