Know Your Customer (KYC)

KYC refers to the policies and procedures used to collect and verify customer information—like government-issued IDs, addresses, and other credentials. Its primary purpose is to confirm that a customer is who they say they are and to assess the risk level they may pose.

Standard KYC requirements include identity document collection, face or biometric verification, address proof, risk profiling, and sanctions or politically exposed person (PEP) checks. Institutions are also required to perform ongoing monitoring of customer activity and update their records when risk factors change.

There are generally two types of KYC: simplified (or basic) KYC and full (or enhanced) KYC. Simplified KYC is used for low-risk customers and allows limited access to services. Enhanced KYC (often called EDD – Enhanced Due Diligence) applies to high-risk clients and involves more thorough checks, including source-of-funds validation and manual reviews.