What is Know Your Customer (KYC)?

Full Definition

Know Your Customer (KYC) is the set of identity verification and due diligence checks that UK banks, building societies, investment platforms and other regulated financial firms are legally required to carry out on customers before opening an account or providing certain services, and periodically afterwards. Typical KYC checks include verifying a customer's name, date of birth and address (often using a passport or driving licence plus a recent utility bill or bank statement, or increasingly an app-based digital identity check), screening against sanctions and politically exposed persons lists, and asking about the expected source and purpose of funds for larger amounts or higher-risk customers. KYC sits within the UK's wider anti-money laundering framework, and firms that fail to carry out adequate checks can face significant regulatory fines from the Financial Conduct Authority, which is why customers are sometimes asked for further documents, or have a payment temporarily delayed or held, even for a legitimate, everyday transaction. For most customers KYC is a one-off or infrequent inconvenience at account opening or when a large, unusual payment is made, but the checks are typically more frequent and detailed for business accounts, high-value transactions, or customers assessed by a firm as higher risk, such as those with complex or international financial affairs.

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