What is KYC
KYC, which stands for Know Your Customer, is a form of protection for both clients and forex institutions that is required to be followed by regulatory authority standards.
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KYC explained
In order to comply with the regulatory authority in place within your forex company’s jurisdiction, and under the Prevention of Money Laundering Act 2002, forex institutions are required by law to comply with KYC formalities. The purpose of KYC is to ensure that forex companies are provided with detailed information about their clients’ risk tolerance, investment knowledge and financial position.
Under KYC, clients are protected by having the forex company know what investments best suit their personal situation. However KYC protects both the client and the forex company, as the forex company is provided with information that explains what they can and cannot include in their client’s portfolio. KYC is a very effective tool since without knowing the customer’s history and background, effective money laundering prevention cannot be ensured.
All financial institutions are required to perform KYC, in order to identify their clients and obtain relevant information in order to carry out forex business with them.
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