KYC: Know Your Customer

Know Your Customer (KYC) is the process of verifying the identity of individual customers and assessing their risk profile before and during a business relationship. KYC is the foundation of anti-money laundering (AML) compliance, ensuring organizations know who they're doing business with.

KYC vs. KYB

While KYC focuses on natural persons—confirming identity documents, addresses, and screening against watchlists—KYB (Know Your Business) extends these principles to business entities and their beneficial owners.

The key distinction:

• KYC answers: "Who is this person?"
• KYB answers: "What is this business, who owns it, and is it legitimate?"

Both fall under the broader Customer Due Diligence (CDD) framework.

Core KYC Elements

Identity Verification

• Government-issued ID (passport, driver's license, national ID)
• Biometric verification (facial recognition, liveness detection)
• Document authenticity checks

Address Verification

• Proof of address (utility bills, bank statements)
• Address database matching

Screening

• Sanctions screening (OFAC, UN, EU lists)
• PEP (Politically Exposed Person) checks
• Adverse media monitoring

Risk Assessment

• Evaluate risk based on customer profile, geography, and behavior
• Apply enhanced due diligence (EDD) for higher-risk individuals

KYC Within KYB

When verifying a business, KYC applies to its beneficial owners. You're verifying both the legal entity and the individuals behind it—making KYB inherently more complex than standalone KYC.

See KYB vs KYC for a detailed comparison.

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Related: KYB | CDD | UBO