Glossary

Know your customer (KYC)

Verifying a customer's identity and assessing their risk before and throughout a business relationship.

Also called: KYC, customer due diligence

Know your customer (KYC) is the process of verifying a customer's identity and assessing their risk both before and during a business relationship. It covers identity verification at onboarding — confirming someone is who they claim to be, using documents, databases, or biometric checks — and ongoing due diligence as the relationship continues.

Customers typically receive an initial risk rating based on factors like geography, industry, and expected transaction patterns, feeding into risk scoring used later by transaction monitoring systems; higher-risk customers usually get "enhanced due diligence," with more frequent review and lower alert thresholds. Analytics teams support this through identity resolution — matching a customer consistently across accounts, channels, and data sources — and periodic re-screening against sanctions and watchlists.

KYC is the foundation anti-money laundering programs are built on, since a monitoring system is only as good as the customer risk profile it checks transactions against. Specific KYC requirements — document types, verification depth, review frequency — vary by jurisdiction and regulated sector, so this is general background, not a compliance checklist for any specific business.

Last reviewed September 22, 2026

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Related terms

Anti-money laundering (AML) The laws, controls, and analytics financial institutions use to detect and prevent the disguising of illegal funds. Transaction monitoring Ongoing, largely automated screening of financial transactions to flag activity that may indicate fraud or laundering. Identity resolution Matching data from different sources and devices to a single underlying person or household despite no shared identifier. Fraud detection Identifying transactions, claims, or behavior that are likely fraudulent, using rules, statistics, or machine learning. Risk scoring Assigning a numeric score to a customer, transaction, or entity that estimates the likelihood of a specific negative outcome.

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