Glossary
KYC (Know Your Customer)
Know Your Customer (universally abbreviated as KYC) is the process of verifying the identity of clients before and during a business relationship. For regulated financial platforms, KYC is not optional. It is a legal requirement under anti-money laundering (AML) legislation, designed to prevent financial crime, fraud, and the misuse of financial infrastructure.
What It Is
KYC encompasses the procedures a financial institution uses to verify that its clients are who they claim to be, that their business activities are legitimate, and that their funds come from lawful sources. It applies to every new user: whether a buyer setting up a supply chain finance program or a supplier joining an early payment platform.
KYC is not a one-time event. It is an ongoing process. Circumstances change (businesses are acquired, ownership structures shift, sanctions lists are updated) and financial platforms must maintain current, accurate records of who they are doing business with.
Failing KYC obligations exposes platforms to regulatory fines, reputational damage, and in severe cases, criminal liability. For users, robust KYC processes provide assurance that the platform they are using operates to high compliance standards.
The KYC Process
Step 1: Identity Verification
Individual users (directors, beneficial owners, authorised signatories) must provide government-issued identification: passport, national ID card, or driving licence: and proof of address. Document verification is performed digitally using AI-powered identity verification tools that detect forgeries and confirm document authenticity in real time.
Step 2: Business Verification
The company itself must be verified. This involves confirming:
Legal entity name and registration number
Registered address and country of incorporation
Company type (limited company, partnership, etc.)
Regulatory status, if applicable
Certificate of incorporation and Articles of Association
Step 3: Ultimate Beneficial Owner (UBO) Identification
Any individual who ultimately owns or controls 25% or more of the company must be identified and verified. UBO disclosure is a cornerstone of AML regulation: it prevents criminals from hiding behind corporate structures.