About Lesson
Stock exchanges and trading platforms have to comply with national and international guidelines. For example, the New York Stock Exchange (NYSE) and the NASDAQ have to comply with regulations set by the United States government.
Know Your Customer (KYC) or Know Your Client guidelines ensure that institutions facilitating the trading of financial instruments verify their customers’ identity. Why is this important? The main reason behind it is to minimize the risk of money laundering.
In addition, KYC regulations aren’t only valid for participants of the financial industry. Many other segments also have to comply with these guidelines. KYC guidelines are generally a piece of a much broader Anti Money Laundering (AML) policy.