KYC, which stands for Know Your Customer, is a term used to describe the process of identifying and verifying the identity of customers or clients. This process is important for businesses in various industries, such as banking, finance, and real estate, as it helps to prevent fraud, money laundering, and other illegal activities.

KYC compliance is mandated by various government agencies and regulators around the world. The documents required for KYC vary depending on the industry and the country in which the business is operating. However, some general documents are commonly required for KYC purposes. 

In this article, we will discuss the documents required for KYC and their importance.

Documents Required for KYC

The most important documents required for KYC include: 

1. Proof of Identity

The most important document for KYC is proof of identity. This is a document that proves the identity of the customer. The most common documents used for proof of identity are government-issued identification documents like a passport, driver’s license, or national ID card.

a. Passport

A passport is a travel document issued by the government that proves the identity and nationality of the holder. It is an internationally recognized document and is often used as proof of identity for KYC purposes. To verify the authenticity of the passport, the business must check the security features of the passport, such as holograms, watermarks, and biometric information.

b. Driver’s License

A driver’s license is a government-issued document that allows the holder to operate a motor vehicle. It contains the name, address, and date of birth of the holder, and is often used as proof of identity for KYC purposes. To verify the authenticity of the driver’s license, the business must check the security features of the license, such as holograms, watermarks, and microprinting.

c. National ID Card

A national ID card is a government-issued document that contains the name, address, and date of birth of the holder. It is often used as proof of identity for KYC purposes in countries where it is mandatory to have a national ID card. To verify the authenticity of the national ID card, the business must check the security features of the card, such as holograms, watermarks, and microprinting.

d. Voter ID Card

A voter ID card is a government-issued document that contains the customer's name, photograph, address, and date of birth. It is commonly used as an identity proof document in India.

e. PAN Card

A PAN card is a government-issued document that is used for tax purposes in India. It contains the customer's name, photograph, and date of birth.

2. Proof of Address

In addition to proof of identity, businesses also need to collect and verify proof of address. This is a document that proves the address of the customer. The most common documents used for proof of address are utility bills, bank statements, and government-issued documents like a driver’s license or national ID card.

a. Utility bills

Utility bills like electricity bills, water bills, or gas bills are often used as proof of address for KYC purposes. The bill must be recent (usually within the last three months) and must contain the name and address of the customer. To verify the authenticity of the bill, the business must check that it is an original bill and not a photocopy or printout.

b. Bank statements

Bank statements are also commonly used as proof of address for KYC purposes. The statement must be recent (usually within the last three months) and must contain the name and address of the customer. To verify the authenticity of the statement, the business must check that it is an original statement and not a photocopy or printout.

c. Driver’s license or national ID card

In some countries, a driver’s license or national ID card can be used as both proofs of identity and proof of address. The address on the document must be the same as the address of the customer. To verify the authenticity of the document, the business must check the security features of the document, such as holograms, watermarks, and microprinting.

d. Bank Statement

A bank statement is another commonly accepted address proof document. It contains the customer's name and address, as well as details of their bank account.

e. Rental Agreement

A rental agreement is a document that is used to verify the customer's residential address if they are living in a rented property. It contains the customer's name and address, as well as details of the rental agreement.

f. Passport

A passport can also be used as an address proof document if the customer's address is mentioned in the passport.

g. Voter ID Card

 A voter ID card can also be used as an address proof document if the customer's address is mentioned in the card.

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3. Proof of Income

Some businesses may also require proof of income as part of the KYC process. This is a document that proves the income of the customer. The most common documents used for proof of income are: 

a. Salary Slip

A salary slip is a document that is provided by the employer to the employee. It contains details of the employee's salary, including the amount, deductions, and taxes.

b. Bank Statement

A bank statement can also be used as an income proof document. It contains details of the customer's income, including deposits, withdrawals, and other transactions.

c. Income Tax Return

An income tax return is a document that is filed by the customer with the government to report their income and taxes. It contains details of the customer's income,

4. Business Proof

Business proof is required for KYC when the customer is a business entity or a self-employed individual. The purpose of business proof is to establish the existence of the business and to confirm the identity of the owner. Examples of business proof documents include:

a. Business registration certificate 

b. Partnership deed 

c. Memorandum of Association d. Articles of Association

Business registration certificate is the most commonly accepted business proof document as it establishes the existence of the business and contains the name and address of the owner. Partnership deeds, Memorandum of Association, and Articles of Association are also acceptable as they contain details about the business and its ownership.

5. Other Documents

Apart from the above-mentioned documents, some institutions may require additional documents for KYC purposes. These documents may include:

a. References from other financial institutions 

b. Photographs 

c. Signature specimens

References from other financial institutions are required to establish the customer's financial history and to confirm their identity. Photographs and signature specimens are required to ensure that the customer's photograph and signature match the ones on the identity proof document.

Bottom Line

When it comes to identifying and verifying your clients, certain documents will make for a smooth process. Documents used in formal transactions such as Banks statements or Government issued/approved documents are best used in this process. Youverify is your go-to RegTech Company for all your financial transactions. Request a Demo.