What is a Customer Identification Procedure?

With few exceptions, financial services across the globe must identify and verify their customers and ensure that sufficient safeguards are in place to prevent fraud, money-laundering and counter the funding of terrorism (CFT). The system a company puts in place to identify its customers is called a Customer Identification Procedure, and it is often based on relevant international, regional or national AML standards.

Financial institutions such as banks and investment companies are the traditional recipients of KYC, AML and CFT mandates, as these norms were originally designed to be enforced within their own operations. However, the past two decades was marked by technology-driven financial innovation and new institutions were included into the regulatory framework, such as payment service providers, digital asset custodians, e-wallets, and cryptocurrency exchanges.