KYC stands for Know Your Customer. KYC is a regulatory and legal obligation for payment institutions to identify and verify the identity of their clients. When you open a bank account and make financial transactions in your everyday life, the institutions involved in the transactions have different ways of verifying who you are, often by asking a proof of identity such as a copy of your passport.
Financial institutions and banks undertake the KYC process to comply with various anti-money laundering (AML) regulations and regulations countering the financing of terrorism (CFT). In addition this is also to protect clients from identity theft and fraudulent activities on the accounts.