\u201cSuddenly you must provide additional information!\u201d Businesses view KYC-enquiries as a motion of distrust.<\/p>\n
Just as most entrepreneurs want to know who they are dealing with and whether, for example, their contact and bank details are correct, so do financial institutions need to extensively know their customers. This is called the Know-Your-Customer (KYC) principle. Who are the owners of the company? Are there any other stakeholders? Who are the signatories? What are the expected transaction details? That kind of information. Many entrepreneurs find this bureaucratic and do not follow up on these enquiries. However, it is a necessity. If entrepreneurs do not provide the requested information, they can be locked out of payment transactions. Financial institutions that do not verify and monitor their customers properly can be fined and ultimately lose their licences.<\/p>\n
Every financial institution has a regulatory obligation to thoroughly screen his customers and monitor their transactions. These and other requirements in the WWFT (Dutch laws against money laundering and financing of terrorists) must ensure safe trade and prevent criminal transactions through financial institutions. The KYC regulations (Know-Your-Customer) apply to all financial institutions, such as banks, payment institutions and insurance companies. Piet Mallekoote, Managing Director of the Dutch Payments Association: “That is the reason banks and payment institutions request personal and business details from their customers, both from new customers and existing customers. The latter often find this odd, as they have been doing business with their bank or payment institution for a long time and suddenly need to verify and supply all kinds of additional information. It feels like distrust but it is not intended as harassment of customers by banks and payment institutions. It is a joint regulatory requirement to keep payment transactions safe and to comply with stricter legislation against fraud”.<\/p>\n
Entrepreneurs don\u2019t enjoy the necessary extra work and often ignore a request for additional information. The ramifications can be very unpleasant. Businesses that do not provide the required data run the risk of no longer receiving payments, for example from debit card, credit card or other transactions, or even of being fully locked out. Financial institutions must comply with these regulations very strictly, because they risk fines or even losing their licence. It is therefore in the mutual interest of financial institutions and businesses to have the KYC data in order.<\/p>\n