CSEET · Business Communication · Common Business Terminologies
Which one of the following statements about the term 'KYC' in banking is correct?
KYC means Know Your Customer. It is the process by which a bank verifies a customer's identity and address when opening an account, and it helps prevent fraud and money laundering. It is not a lending rate, a profit statement or an interest calculation method.
- AIt is a process of verifying a customer's identity and address before or while opening an account, to prevent fraud and money launderingCorrect
- BIt is a rate at which the central bank lends short-term funds to commercial banks
- CIt is a statement summarising a company's profit for the year
- DIt is a method of calculating interest on a loan using a reducing balance
Explanation
KYC stands for Know Your Customer. Banks verify identity and address documents to guard against fraud, money laundering and terror financing. The option about lending to banks describes the repo rate, the profit statement describes an income statement, and reducing balance describes an interest calculation method. None of these is KYC.
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