In one sentence
Know-your-customer and anti-money-laundering procedures verifying identities and screening for illicit activity.
The longer version
KYC and AML rules require lenders to identify their customers, understand ownership, and screen for money laundering risk. Documentation of these checks is part of the loan file and a compliance expectation.
For entity borrowers, KYC extends to beneficial ownership, connecting to the certifications the file must retain.
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