Know Your Customer (KYC) is a collection of guidelines for verification of the client’s identity, suitability, and risks involved with maintaining a business relationship. While primarily KYC was imposed only on the financial institutions, non-financial industries have also gladly adopted the world-known practice. The main goal of the KYC is to prevent businesses from being used for money laundering.
Why use KYC?
In any industry transparency between a provider and a client is a sign of a strong and mutually beneficial partnership. The process of identifying customer’s identity allows MROs to prevent fraudulent companies or individuals from exploiting business for malicious purposes or with intention of causing harm. By examining provided information, MROs can decide whether a customer is allowed to have business relations with them and assess risks to avoid unnecessary losses.
Also, the KYC practice helps to ensure that collaboration between both parties will not have negative effects on one’s reputation, taxation, or legal matters. Most MROs ensure a smoother and healthier customer experience when the company has information about legitimate business practices.
Why some are scared of KYC procedures?
European maintenance, overhaul, and repair organization Jet Maintenance Solutions shared reasons why some customers are unwilling to follow up with the identification phase. “Firstly, some of our clients are just scared of the procedure, it is unknown to them, thus they have no indication of what to expect. We always educate individuals or companies, which are not familiar with the system. Some clients have adopted Know Your Customer procedures into their business and the results have been positive. The use of this principle has benefited Jet Maintenance Solutions numerous times when from a first look a client seems reputable, but after going through KYC identification it appears a customer bears a high risk of reputational damage to us. From our experience there has never been a case where a truly transparent and legitimate business would need to worry about their background check.” – commented Vytis Zalimas, the CEO of Jet Maintenance Solutions.
KYC a loser or a profiteer?
From the additional comments given by Vytis Zalimas, he believes that KYC practice in the MRO business has strong long-term gains potential. “It is no secret we have lost several big contracts due to additional requirements of identification. In my eyes, several smaller contracts with reputable companies provide us with more value. With provided certainty that we will not experience any reputational damages, we win more than we would by choosing a secretive customer. KYC has provided us with an option to identify and work with only transparent and reputable clients. Jet MS is well known across the globe and has a strong reputation from numerous achievements and collaborations with high-profile companies, thus our customers and reputation are the number one priority in any partnership.