KYC means - "Know Your Customer" and is designed for enhanced security and to prevent abuse.
The U.S. Department of the Treasury issued final rules under the Bank Secrecy Act to clarify and strengthen Customer Due Diligence requirements. As per these requirements, financial institutions are required to identify and verify the identity of beneficial owners or legal entity customers as part of their AML Compliance Program.
Per the Final Rule, “Criminals have exploited the anonymity that legal entities can provide to engage in money laundering, corruption, fraud, terrorist financing, and sanctions evasion, among other financial crimes.” Strong Know Your Customer (KYC) practices that include identifying and verifying the identity of the natural persons who own or control a legal entity help defend against these abuses.
The official ruling can be found at: https://www.federalregister.gov/documents/2016/05/11/2016-10567/customer-due-diligence- requirements-for-financial-institutions