KYC (Know Your Customer)

KYC is part of customer due diligence, which the Financial Action Task Force (FATF) sets out in its Recommendation 10 and which national laws, such as the UK's Money Laundering Regulations 2017, make mandatory. It typically involves collecting and verifying identity documents, checking customers against sanctions and politically exposed person (PEP) lists, assessing risk, and applying enhanced checks to higher-risk customers.

Merchants meet KYC from two directions. As a PSP's customer, a business goes through KYC and KYB checks before it can accept payments: the provider verifies the company, its owners and directors, and its business model. Merchants in regulated sectors such as gambling, financial services and crypto may also have to run KYC on their own customers, and their PSP will want to see how they do it.

KYC is ongoing rather than one-off. Providers monitor transactions and may ask for updated documents, proof of address or source of funds, particularly when volumes change sharply. Incomplete or slow responses are a common reason for delayed onboarding or held payouts, so preparing company documents, ownership details and website policies in advance helps.