Know Your Employee (KYE)

No, that’s not the case. KYE was born out of the Know Your Customer (KYC) term, which is the process of verifying users before accepting them as new clients. KYC, or this ID verification process, is part of a bigger Anti-Money Laundering (AML) framework, which requires extra measures like screening the clients against sanctions lists or monitoring their transactions. In this sense, understanding your employees helps you identify their strengths and weaknesses, ensuring role suitability. However, this does not imply that an employee is involved in criminal activity or money laundering.

When new hires join, they gain access to sensitive information like financial data. If there are no verification measures in place, there’s a greater risk of employees abusing their access or sharing information with unauthorized parties. That’s why implementing the KYE process helps identify potential risks that an employee might bring to the company.

Even if you aren’t working in a regulated sector, conducting quick background checks on potential new hires helps build stronger relationships and minimizes the chances of fraud. 

More importantly, this process helps:

• Promote a safe and transparent work environment. 
• Make the onboarding process for the new hire more efficient. 
• Verify employee authenticity and reduce risks linked to past criminal activities.

This is vital to maintain a long-term relationship with an employee, which is often one of the main goals for the human resources department. With this sort of verification, you understand the employee’s needs better and build a creative environment.

Potential hires can provide false details on their resume, such as fake education or work history. They can also use stolen data, like another person’s TIN or SSN, to commit fraud. More importantly, some people use forged documents or already have a criminal record that disqualifies them from certain roles. 

Organizations use the Know Your Employee process during hiring to verify new applicant identities, qualifications, and backgrounds. 

However, KYE is also used for:

• Auditing and record-keeping. It ensures accurate documentation and shows a company’s commitment to compliance in terms of internal/external audits.
• Fraud prevention. For example, this process helps detect internal scams like skimming. Additionally, reverifying credentials in high-risk situations, such as compromised employee data, is crucial for compliance.