Kyc verification
Family VIII · Regulation
Not to be confused with proof of address, anti money laundering check, segregated client account.
KYC verification is the identity-confirmation stage of a firm's anti-money-laundering and counter-terrorist-financing obligations. It establishes who the client is, who ultimately controls the assets, and whether the relationship falls into a higher-risk category. The specific documents accepted, the thresholds that trigger checks, and the retention periods are set by national law and the firm's own risk policy, so they differ between brokers, countries and regulators.
What the process covers
Verification typically has four parts: identifying the client, verifying that identity against independent evidence, identifying any beneficial owner behind a corporate entity, and screening the client against sanctions and politically exposed person lists. Ongoing monitoring continues after onboarding.
- Identity: name, date of birth, address, and a government-issued identifier.
- Evidence: a passport or national identity card, plus a recent utility bill or bank statement for address.
- Beneficial ownership: for companies, the natural persons who ultimately own or control the entity.
- Screening: sanctions, adverse media, and PEP status.
Requirements are not uniform. A jurisdiction may accept a certified copy where another demands an original, and a firm may apply enhanced checks to clients from higher-risk countries regardless of the minimum legal standard.
Worked example: threshold and document check
A firm applies a simplified check below a set cumulative deposit threshold and full verification at or above it. The threshold is a firm policy figure, not a universal number.
The threshold, the documents accepted, and the consequence of failing verification are all set by the firm under its local rules.
Timing and consequences
Verification can occur before the first transaction or, where permitted, during the establishment of the relationship with limits on activity until it is complete. A firm that cannot complete verification must decline or terminate the relationship and consider whether a suspicious activity report is required. Records are kept for a period set by local law, which varies by jurisdiction.
Often confused with
- proof of address
- A document that verifies a person's residential address, typically issued by a bank, utility or government body, required by regulated financial firms to satisfy identity and anti-money-laundering checks.
- anti money laundering check
- An anti money laundering check is a set of identity, ownership and source-of-funds verifications that a regulated financial firm must perform on a client before and during a business relationship, as required by applicable AML legislation and supervisory rules.
- segregated client account
- A segregated client account is a bank account holding customer funds separately from the firm's own money, so client balances are not available to the firm's creditors if it becomes insolvent.
See also
- anti money laundering check
- asic regulated broker
- broker insolvency
- broker license
- cftc regulated broker
- chargeback