Know your customers for the purpose of preventing and combating money laundering

Abstract

It is very important for a financial institution to know its customers: their main type of activity, the countries where they conduct business, their links with politically exposed persons, their partners, etc., in order to avoid the implication of the Bank in schemes of money laundering which can cause reputational risk and fines from authorities. The purpose of this scientific research is to highlight the importance of the process of „Know Your Customer” (KYC) for financial institutions during the stages of money laundering process, to identify the risks of non identification the customers, to present the risks connected to the customers from sanctioned countries in order to elaborate a strong anti-money laundering (AML) program, adopting prudent and healthy banking practices.