Why is the KYC a mandatory requirement for a phone connection? This article explains why it is done and how it keeps you safe.
The term ‘KYC’ has become quite significant across various institutions in the country today. Let us take a look at what it means and why you need to know about it..
What is KYC? KYC is an abbreviation for the term ‘Know Your Customer’ which is a mandatory requirement put in place across Government institutions, all banks and service providers like mobile operators, utilities, etc.
Why is it required? KYC is required for the institutions named above to be able to identify and do business with genuine customers. The main function of KYC is to check thefts, frauds, online identity thefts, money laundering and other economic offences like funding terrorism activities. It also checks illegal or unknown sources of income (via drug or human trafficking, extortion, theft, etc.) Basically, the KYC process helps institutions do business on a legal and correct footing with its customers. It helps banks, particularly, to keep tabs on suspicious activities, withdrawals and deposits, etc.
What do you have to do for it? As far as customers are concerned, KYC is a simple process that requires submission of your latest address and identity proof. These comprise Aadhar card/PAN card/passport where these suffice for both identity and address proof. Address proofs also comprise power/landline/gas bills displaying your name on the bill, or driver’s license/election voter ID card.
Why is it required for phone connections? You might be surprised that you require to undergo a KYC process for a new prepaid connection. However, mobile SIM cards are vulnerable to the most misuse by anti-social elements. New prepaid connections may be taken temporarily to carry out an illegal or spurious activity, and then discarded. Mostly, temporary SIM cards are procured by stealing the identities of actual customers – the latter then gets into legal trouble if the number is discovered by the investigating agencies. But if the phone provider has done the due diligence of the customer by asking for KYC proofs while approving the new prepaid connection, then you are safe. The provider must ensure that your data is safe from online theft so that another person may not use the same number in your name.
Whom should I trust for the safest transactions? Leading phone providers in the country like Airtel have a reputation to maintain and cannot risk any slip-ups in terms of data thefts. They have several safety protocols in place to ensure that your new prepaid connection is granted to you only after a physical verification of your address and identity. The new SIM card is not activated till the company is convinced of the customer’s credentials. Airtel will stop the application process if there is an address or identify information mismatch. In some cases, any suspicious applications may also be handed over for further investigation to the right authorities.