01
Identity verification
Collect and validate identity data and documents — government ID, proof of address, and, where required, biometric or liveness checks via an IDV vendor.
Glossary · KYC
What is KYC (Know Your Customer)?
Verifying who your customer really is — before you onboard them.
KYC, short for Know Your Customer, is the regulated practice of identifying and verifying a customer's identity at onboarding and monitoring it over the life of the relationship. It is a core requirement of anti-money-laundering (AML) law in nearly every regulated market.
02
Customer due diligence
Build a risk profile from the customer's identity, source of funds, and intended use of the service. Higher risk triggers enhanced due diligence (EDD).
03
Screening
Check the customer against sanctions lists, PEP databases, and adverse-media sources at onboarding and on an ongoing basis.
04
Ongoing monitoring
Re-verify and re-screen on a risk-based schedule (perpetual KYC), and review transactions or behavior that deviates from the expected profile.
Definition
Know Your Customer (KYC) is a set of controls that a regulated business uses to confirm a customer is who they claim to be, assess the risk they pose, and detect activity that does not match their profile. KYC sits inside a broader AML program and typically covers identity verification, customer due diligence, sanctions and PEP screening, and ongoing monitoring.
Why KYC matters
Regulators in the US (FinCEN), EU (AMLD/AMLR), UK (FCA) and beyond require firms to run KYC before opening accounts or providing services. Weak KYC exposes a business to money laundering, fraud, regulatory fines, and reputational damage. Strong KYC — collected once, structured, and auditable — also reduces onboarding friction and shortens time-to-revenue.
How Pegalio helps
Pegalio is the onboarding and orchestration layer around your KYC program. It collects identity documents through a branded customer portal and structured forms, routes each case through review and approval with role-based access control, fires automations when a step is missing or overdue, and records every action in an immutable audit log. Pegalio integrates with the IDV, sanctions, and AML vendors you already use rather than replacing them — so compliance, operations, and engineering work from one source of truth.
Frequently asked questions
Is KYC the same as AML?
No. AML (anti-money laundering) is the broad legal framework and program; KYC is one component of it — the part focused on identifying and verifying customers and understanding their risk.
When is KYC required?
Typically before you open an account or provide a regulated service, and then periodically afterward. Banks, fintechs, crypto platforms, lenders, and many marketplaces are obligated to run KYC.
What documents does KYC require?
Commonly a government-issued photo ID and proof of address. Higher-risk customers may require source-of-funds evidence, additional documents, or enhanced due diligence.
What is the difference between KYC and KYB?
KYC verifies individual customers; KYB (Know Your Business) verifies legal entities and the people who own or control them, including ultimate beneficial owners (UBOs).