KYP (Know Your Partner) is a process in which the connected individual is evaluated based on their behavior, actions, and other aspects. This procedure ensures that the people who are linked together are safe and have no potential risks. KYP is also being used in several healthcare centers as KYP know your partner. It refers to the history of the patients and the last medications suggested. Besides, businesses also use the same process which deals with the complete identification of all the customers to avoid any fraud in the company. It ensures better relationships with the customer, stakeholders, and the partners.
Difference Between KYP and KYC
KYC is one of the major necessities for businesses to comply with. It is a legal requirement for companies to verify customers to avoid frauds like money laundering. It helps minimize financing of terrorism (CTF) regulations. It is mainly utilized in financial sectors like banks where security is the priority. People are interrogated in terms of their backgrounds, addresses, and others. It verifies whether the person is legitimate and is unable to cause any harm to the company.
Moreover, KYP is a broader way of evaluating people in any organization. It involves the verification of customers, employees, contractors, and stakeholders. The process is not only about keeping a check on transactions, it also deals with examining behavior, trust, and dependence to make secure relationships. Besides, KYC is a legal requirement by law. It is a best practice to mitigate risks and maintain a more secure connection with the stakeholders. Apart from personal data, the system also needs the background information and day-to-day information of the activities which help to assess risk and cater to it timely.
KYP and Processes
Several other processes work to ensure the safety of businesses instead of KYP. Know your customer, KYA (know your associate), and KYB ( know your business) are some of the processes that are used to verify the customers in organizations. But they all differ in terms of the role they play in different areas.
The above-mentioned excerpt clearly states the difference between KYC and KYP while KYB and KYA differ in a variety of ways.
- KYB is a process that verifies and identifies the authenticity and accuracy of any business and the company but not people. Several financial institutions and agencies are evaluated to check whether they are legal and operating correctly without any potential risk. The evaluation includes the investigation of the company’s records, documents, and registration records. KYB focuses on the sole entity of businesses only while KYP focuses on the authenticity of the individuals.
- The process in which an individual’s social and commercial links are evaluated is known as KYA (know your associates). It focuses on the verification of the connections of an individual whether they are suspicious or not. It is helpful while working with high-level business partners or while evaluating personal relations on professional level. It doesn’t engage with the individuals directly but the associations only, while KYP focuses on the individuals, customers, or employees.
Advantages of KYP
It is crucial to follow KYP processes help to promote secure conversations. In businesses, it plays a crucial role in maintaining smooth operations. It ensures that the companies are not working with employees who are suspicious and can commit fraud shortly.
- Transparency is one of the fundamental requirements of KYP. It creates trust, and trust is the foundation of all successful links in the businesses. There is a strong need to be open in front of business partners. It maintains trust and loyalty and is a strong foundation of any relationship.
- KYP verification is a crucial component of risk control. Companies can easily identify possible risks and make strategies to overcome them. The process involves the investigation of possible risks and compliance with the rules.
- It is important to make the best possible decisions after understanding and knowing the risk. KYP can empower businesses in terms of security and reliability.
Conclusion
Thus, KYP is helpful in a variety of ways and helps businesses and people professionally and personally. Unlike KYP, KYC focuses on clients in financial institutions while KYA refers to the evaluation of commercial and social connections of an individual. Besides, KYB deals with the verification of solely the business or a company. All these processes ensure the authenticity, accuracy, and efficacy of businesses, employees, and people to maintain a secure and safe relationship in various contexts.
