KYC (Know Your Customer)
The checks banks and their partners run to confirm who a customer is and assess risk, at account opening and throughout the relationship.
What KYC is
KYC is the set of checks a financial institution runs to confirm a customer's identity and understand the purpose and risk of the account. In the US, KYC rests on the Bank Secrecy Act. Two rules set the requirements: the Customer Identification Program (CIP) rule and FinCEN's Customer Due Diligence (CDD) rule.
How it works
KYC starts before an account opens and continues while it stays open, with deeper checks for higher-risk customers. In Banking-as-a-Service (BaaS) programs, the fintech often collects the information while the bank sets the requirements and stays responsible.
- 01 · COLLECT For individuals: name, date of birth, address and an ID number, such as an SSN.
- 02 · VERIFY Identity is confirmed with documents or data and screened against sanctions lists.
- 03 · MONITOR The customer's risk profile is kept current and unusual activity is reviewed.
Who must comply
- Banks and credit unions, under the CIP and CDD rules
- Broker-dealers, mutual funds and other covered financial institutions
- Fintechs that onboard customers for a sponsor bank, under the bank's program
- Platforms onboarding businesses, with know your business (KYB) checks on firms and owners
Cross River runs KYC and KYB reviews as part of its compliance management system, alongside due diligence on partner relationships and ongoing testing and monitoring. See how Cross River approaches compliance.