KYC (Know Your Customer)

Know Your Customer (KYC) is the regulatory and business practice of verifying the identity of individual customers before establishing a financial services relationship or allowing access to payment services. KYC is a foundational component of AML (Anti-Money Laundering) compliance programs and is required by financial regulators in most jurisdictions as a condition of operating financial services businesses.

The core requirements of KYC include: collecting basic identity information (name, date of birth, address, government-issued ID number), verifying that information against reliable, independent sources (government identity databases, credit bureau data, document verification services), and screening the customer against sanctions and watchlists to confirm they are not a Politically Exposed Person (PEP) or subject to financial sanctions. The depth of verification required scales with the risk profile of the customer and the services being offered.

In the payments context, KYC is most directly relevant to platforms and services that onboard individual consumers for payment accounts, digital wallets, or payment initiation services. Consumer-facing Embedded Finance products, bank accounts, prepaid cards, lending products, typically trigger the most rigorous KYC requirements. Payment processing for established business customers may have lighter KYC requirements for individual users and more emphasis on KYB (Know Your Business) verification at the business level.

KYC is not a one-time event. Ongoing customer due diligence, monitoring customer behavior for changes that indicate elevated risk, updating customer records as circumstances change, and refreshing verification for high-risk customers periodically, is a core element of a mature KYC program.