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Requesting additional personal and company information is useful and necessary

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“Suddenly, you have to provide all kinds of information!” Business owners can see requests made for Know Your Customer checks as a vote of no confidence.

Young man sitting behind a laptop in a bright home office, looking into the camera with a smile and giving a satisfied thumbs up.

Just as many business owners want to know who their customers are and whether details such as their address and bank information are correct, financial institutions must also know their customers. This is known as the Know Your Customer (KYC) principle. Who owns the company? Are there other beneficial owners? Who is authorised to sign? What transaction patterns are expected? These are examples of the information required. Many business owners regard the process as bureaucratic red tape and take no action, but it is necessary. If business owners fail to provide the requested information, they may be denied access to payment services. Financial institutions that do not check their customers properly may be fined and, in the most serious cases, lose their licence.

“Not to make life difficult for business owners”

Every financial institution that a business owner deals with is legally required to verify the identity of its customers and screen their transactions for risks. These and other obligations under the Dutch Anti-Money Laundering and Anti-Terrorist Financing Act are intended to ensure safe commerce and prevent criminal activity through financial institutions. The KYC requirement applies to all financial institutions, including banks, payment institutions and insurers. Piet Mallekoote, Managing Director of the Dutch Payments Association, explains: “That is why banks and payment institutions request personal and company information from both new and existing customers. Existing customers often find this strange because they have already dealt with their bank or payment institution for some time and are suddenly asked to verify and provide all kinds of information afterwards. That can feel like distrust. But banks and payment institutions are not doing this to make life difficult for business owners. They do it to keep payments secure together and to comply with stricter anti-fraud legislation.”

What if you do not comply?

Business owners do not welcome extra work and often put requests for additional information aside. That can have serious consequences. Those who do not provide the information risk not receiving settlements for debit card, credit card or other transactions, or even being denied access to payment services altogether. Financial institutions must apply the rules very strictly because they risk fines or even the withdrawal of their licence. Keeping KYC information in good order is therefore in everyone’s interest.

Read more about KYC…

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