KYC and AML
KYC and AML are related but distinct: Know Your Customer is the process of identifying and understanding customers, while Anti-Money Laundering is the broader legal and operational framework for preventing the financial system from being used to launder criminal proceeds or finance terrorism.
Why it matters
Regulators assess firms on their AML programme as a whole. KYC feeds it with verified identities and risk ratings; screening, monitoring and reporting act on that information. A gap in either undermines the other.
How it works
- KYC: identify, verify and risk-rate the customer at onboarding.
- Screening: check customers against sanctions, PEP and adverse-media sources at onboarding and continuously.
- Monitoring: watch transactions and behaviour for patterns inconsistent with the customer profile.
- Reporting: file suspicious activity reports with the relevant authority.
- Governance: policies, training, independent testing and record keeping.
Common challenges
- Fragmented tooling across identity, screening and case management.
- Name-matching noise in multilingual and transliterated names producing false positives.
- Demonstrating to auditors that decisions were made consistently and are traceable.
How IDWise supports this
IDWise addresses this within the Continuous Trust Platform through the following modules, configured per market, product line and risk tier.
Frequently asked questions
Who has to comply with KYC and AML rules?
Banks, payment and e-money institutions, brokers, exchanges, insurers, lenders and, in many jurisdictions, real-estate agents, lawyers and dealers in high-value goods.
What is customer due diligence?
The collection and assessment of information about a customer to understand risk, with enhanced due diligence applied to higher-risk customers such as PEPs.
How often should customers be re-screened?
Continuously or at least whenever lists update; many firms re-screen daily.
Related terms
Talk to an IDWise specialist about your markets, regulators and risk controls.