KYC (Know Your Customer)
Know Your Customer (KYC) is the process a regulated business uses to establish and verify the identity of a customer, understand the nature of the relationship, and assess the risk the customer presents before and during the relationship.
Why it matters
KYC is the foundation of anti-money-laundering (AML) and counter-terrorist-financing regimes worldwide. Regulators require firms to know who they are dealing with so that criminals cannot use the financial system anonymously. Weak KYC exposes a firm to fines, licence conditions, and reputational damage; slow KYC drives applicants to abandon onboarding.
How it works
- Customer identification: collect identity data such as name, date of birth and nationality, and verify it against a government-issued document.
- Identity verification: confirm the document is genuine and that the person presenting it is its rightful holder, typically with a selfie and liveness check.
- Customer due diligence (CDD): understand the purpose of the relationship, source of funds and expected activity.
- Screening: check the customer against sanctions lists, politically exposed person (PEP) registers and adverse media.
- Risk rating: assign a risk level that determines the depth of due diligence and the frequency of review.
- Ongoing monitoring: keep the profile current through periodic re-verification (re-KYC) and continuous screening.
Common challenges
- Document diversity across markets, including non-Latin scripts and frequent redesigns.
- Balancing regulatory depth with an onboarding experience that customers complete.
- Detecting synthetic identities, deepfakes and repeat fraudsters that pass single-point checks.
- Keeping KYC current after onboarding rather than treating it as a one-time event.
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
What documents are used for KYC?
Government-issued identity documents such as national ID cards, passports, residence permits and driving licences, often supported by proof of address such as a utility bill or bank statement.
Is KYC a one-time check?
No. Regulators expect KYC to be maintained. Firms review customer information periodically based on risk, and re-verify identity when documents expire or risk changes.
What is the difference between KYC and AML?
KYC is the customer identification and due-diligence part of a wider AML programme, which also includes transaction monitoring, screening, reporting and governance.
Related terms
Talk to an IDWise specialist about your markets, regulators and risk controls.