You are appointed as Compliance Officer of the company. One of the foreign investor in the company is hesitating to provide personal data during the KYC saying that KYC is a risky process and data can be misused by someo

The objectives of conducting KYC is to prevent the corporate vehicles from being used intentionally or unintentionally, by criminal elements for illicit purposes such as money laundering activities, fraud, bribery and corruption, shielding assets from creditors, illicit tax practices, market fraud, terrorist funding and avoiding future risk. The KYC related procedures also enable an institution to better understand their customers and their financial dealings. This helps in managing associated risks prudently. There are different types of risk involved in the proper implementation of KYC Reputational Risk like entering into fraudulent transaction and later on the public come to know about it, this would create a sense of insecurity among the public. Operational Risk is a risk of loss due to failed internal processes, poor documentation, litigation, disputes and due diligence, people and systems or also from external events. The Risk that arises legally in case where any client gets involved with any illegal activity, it will also attract penalties and adjudications on the professional. Financial Risks If any professional without complying with KYC norms, provides its services relating to certification or declarations and the financial institution gives loan to a customer and later the bank fails to identify the customer, then it will be hard for the bank to retrieve its money.