Understanding KYC in Crypto

As regulatory scrutiny intensifies, organisations must treat Know Your Customer (KYC) and Customer Due Diligence (CDD) as strategic imperatives. This is especially true as global bodies like the Financial Action Task Force (FATF) tighten their recommendations, and countries adopt stricter compliance frameworks to counter money laundering and terrorism financing.

Financial institutions, fintechs, and other regulated entities are now required to adopt more granular, real-time approaches to verifying customer identities, assessing risk, and reporting suspicious activity. From the UK and EU to the US and Asia-Pacific, regulatory reform is accelerating and compliance programmes must evolve in tandem.

What is Customer Due Diligence (CDD) in KYC?

Customer Due Diligence is the process of verifying a customer’s identity, understanding their financial dealings, and assessing the risk profile they represent to your business. It's a core component of any AML (Anti-Money Laundering) framework and a legal requirement in most jurisdictions.

Recent regulatory shifts including the EU’s Sixth Anti-Money Laundering Directive (6AMLD) and updates to FATF’s Recommendation 24 on beneficial ownership transparency have raised the bar for what constitutes “sufficient” due diligence. Firms must now capture more detailed customer data (e.g., source of funds, beneficial ownership, date of birth, etc.) and continuously monitor for risk indicators, particularly in high-risk sectors or regions.

Why is Due Diligence So Important in KYC Compliance?

With regulators imposing stricter penalties for non-compliance, effective due diligence has become critical to avoiding legal, financial, and reputational damage. In 2023 alone, global AML fines totalled over $3.2 billion in banking alone, with regulators cracking down not only on misconduct but also on poor due diligence frameworks.

But due diligence isn’t just about box-ticking. It plays a fundamental role in reducing exposure to terrorist financing, fraud, tax evasion, and Politically Exposed Persons (PEPs) attempting to exploit the financial system. By identifying higher-risk customers early, firms can allocate compliance resources more effectively and avoid unnecessary exposure.

Understanding the KYC Due Diligence Process

The due diligence process typically unfolds in three stages, depending on the customer risk:

1. Standard Due Diligence (SDD): Applied to most customers. Involves collecting basic identifying information and verifying it against trusted sources.
2. Simplified Due Diligence (SDD): Applied where risk is demonstrably low (e.g., listed companies or government entities). Less intrusive checks are permitted.
3. Enhanced Due Diligence (EDD): Required for high-risk clients, such as offshore entities or customers from FATF blacklisted jurisdictions. Involves additional scrutiny, document collection, and ongoing monitoring.

A key regulatory update worth noting is the UK’s Economic Crime and Corporate Transparency Act (2023), which expands requirements for beneficial ownership checks, especially in cross-border transactions. Similarly, FinCEN’s Beneficial Ownership Rule, effective from January 2024, mandates all US companies to disclose ownership data for inclusion in a national registry, a game-changer for CDD workflows.

CDD vs EDD: What's the Difference?

While CDD ensures that firms gather the minimum legally required information, EDD is triggered when that’s not enough. For instance, if a client is a PEP or is transacting in a high-risk jurisdiction, firms must dig deeper to understand the source of wealth, assess the legitimacy of business activities, and continue to monitor transactions over time.

The FATF’s updated guidance on EDD for virtual assets and crypto exchanges (2023) specifically targets these sectors, which are increasingly used in financial crime. Regulated firms must now consider transaction volume, anonymity features, and regional risks when applying EDD to crypto-related clients.

How Due Diligence Requirements Vary by Region

United Kingdom

Under the Money Laundering Regulations (MLRs) and the Economic Crime Act, UK firms must maintain a risk-based approach, conduct regular audits, and file Suspicious Activity Reports (SARs) with the National Crime Agency (NCA) when necessary.

European Union

The upcoming EU Anti-Money Laundering Authority (AMLA), expected to launch in 2025, will centralise AML oversight and standardise due diligence requirements across EU member states. This is in addition to the newly adopted AML Regulation, which imposes uniform rules on KYC processes, beneficial ownership, and digital onboarding.

United States

The Corporate Transparency Act (CTA), enforced by FinCEN, will require US businesses to report ownership information. Financial institutions must also adhere to FinCEN’s CDD Rule, which enforces ongoing monitoring and risk reassessment.

Asia-Pacific

Singapore, Hong Kong, and Australia continue to align with FATF guidance but are introducing local enhancements. For example, Australia’s 2024 AML reform bill expands the scope of reporting entities to include legal professionals, accountants, and real estate agents, all of whom must now conduct KYC due diligence.

Overcoming Common KYC Due Diligence Challenges

The volume and complexity of due diligence checks can quickly overwhelm compliance teams, particularly as regulations shift across jurisdictions. Legacy systems, inconsistent data, and manual verification create delays, increase onboarding friction, and heighten the risk of non-compliance.

Regulatory technology (RegTech) is emerging as a key solution to these challenges. Firms are now turning to tools that offer unified risk profiles, document automation, and real-time screening to make their CDD processes more agile, scalable, and auditable.

How Can Automation Improve KYC Due Diligence?

Automation streamlines due diligence by reducing manual errors and enabling real-time decision-making. APIs, AI, and dynamic workflows can automate tasks like:

• Identity verification (including biometric checks)
• Sanctions and PEP screening
• Risk scoring and classification
• Ongoing monitoring and alerting

With increasing global regulatory requirements, automation isn’t just a competitive edge, it’s becoming a compliance necessity. Platforms like FullCircl help businesses implement smart, scalable KYC and Customer Due Diligence processes that can adapt to changing regulations with ease.

What Should You Look For in a KYC Due Diligence Solution?

To stay compliant across jurisdictions and scale operations efficiently, a due diligence solution should offer:

• Global beneficial ownership data and registry access
• Automated PEP/sanctions screening
• Real-time alerts for transaction anomalies
• Country-specific compliance configuration
• Case management and audit trail functionality

Importantly, the solution must also enable enhanced due diligence workflows and integrate with your existing tech stack to drive operational efficiency.

How FullCircl Supports KYC and Real-Time Due Diligence

FullCircl enables regulated businesses to confidently meet both global and national compliance standards. By combining real-time data enrichment, risk scoring, and automated KYC software, AML screening, and document verification, FullCircl helps organisations:

• Rapidly onboard new customers with reduced friction
• Automatically identify politically exposed persons
• Comply with recent laws like the UK Economic Crime Act or FinCEN’s Beneficial Ownership Rule
• Detect and prevent financial crime with live risk signals

Whether you're verifying corporate structures or assessing customer legitimacy across borders, FullCircl provides the tools you need to stay ahead of evolving regulations.

As global regulations grow tighter and enforcement becomes more aggressive, robust KYC due diligence is non-negotiable. Whether you're a traditional bank or an emerging fintech, your ability to identify and manage customer risk determines not only your compliance, but your reputation and resilience.

By embracing automation, adopting real-time data solutions, and staying informed on the latest global regulatory developments, firms can move beyond reactive compliance toward proactive, efficient due diligence.

Want to learn how FullCircl can help you stay compliant, competitive, and confident in an evolving regulatory world? Speak to a compliance expert today.

Frequently Asked Questions (FAQs)

What is customer due diligence (CDD) in KYC?

CDD is the process of verifying a customer’s identity, assessing their financial activities, and determining the level of risk they present. It's a core part of KYC and helps prevent money laundering and financial crime.

Why is due diligence important in KYC compliance?

Due diligence ensures regulatory compliance, helps identify high-risk customers, and protects firms from legal, financial, and reputational risks associated with illicit activity.

How does due diligence reduce financial crime risk?

By validating customer identity and assessing the source of funds, due diligence helps detect suspicious behaviour and prevent fraud, terrorist financing, and money laundering.

What are the types of due diligence in financial services?

There are typically three: simplified due diligence, standard due diligence, and enhanced due diligence (EDD), applied depending on the customer’s risk profile.

What is the KYC due diligence process?

The process includes identity verification, document collection, risk assessment, PEP/sanctions screening, and ongoing monitoring, tailored based on customer risk.

How can companies automate KYC due diligence?

With the use of RegTech platforms, businesses can automate ID verification, screening, document collection, and risk scoring using APIs and machine learning.

What documents are needed for KYC due diligence?

Common documents include government-issued ID, proof of address, company registration data, beneficial ownership records, and information on the source of funds.

What are common challenges in KYC due diligence for regulated firms?

Challenges include fragmented systems, manual processes, poor data quality, high customer onboarding friction, and keeping up with changing regulatory expectations.

What should I look for in a KYC due diligence solution?

Look for automation, global registry access, configurable risk scoring, EDD capabilities, real-time alerts, and seamless integration with your existing workflows.

How does FullCircl support real-time due diligence checks?

FullCircl provides automated data enrichment, live PEP/sanctions screening, beneficial ownership verification, and ongoing risk alerts to power real-time compliance.

What are the benefits of using APIs for KYC due diligence?

APIs enable seamless integration, real-time data updates, reduced manual entry, and faster onboarding, all while improving auditability and compliance accuracy.

Does FullCircl help with enhanced due diligence requirements?

Yes, FullCircl supports EDD through automated risk flagging, deep data analysis, beneficial ownership checks, and configurable workflows for high-risk customers.

In a market which has experienced huge consolidation and an increasingly burdensome regulatory landscape, the importance of Networks in preserving the vital role of independent brokers across the UK cannot be underestimated.

That’s why I was delighted to chair a fantastic roundtable discussion with senior leaders from across the Network space in collaboration with BIBA. Together, in an open, honest, and insightful forum, we debated how Networks can thrive in a rapidly changing environment. It was great to see a shared commitment to supporting brokers and championing the future of the profession.

Here are our top five takeaways:

1. The growing importance of technology and data

Networks and the brokers they support still face frustration when it comes to data - overwhelming volumes, poor quality, inaccessibility, and lack of data sharing are all challenges.  

A key concern centres on how brokers can embrace modernisation without losing that all-important human touch.

Networks that invest in technology to enhance processes across the entire client lifecycle (from augmenting sales and relationship management to compliance, risk placement, and distribution) and provide data-driven insights to members, are differentiating by maximising the ease of trading and therefore driving growth and competitive advantage.

2. Overcoming regulatory burden and cost

The debate centred on the growing need for Networks to support brokers as they navigate an increasingly complex compliance landscape, in particular the burden and cost associated with Consumer Duty compliance. Whilst it was agreed that regulation is vital, it’s important to invest in good governance in tandem with growth and innovation.

The ability to help broker members automate regulatory compliance, reduce the risk of penalties and ensure they can always cost-efficiently operate within regulatory boundaries can help Networks promote a best practice approach without members incurring significant financial and resource burden. This is especially important when it comes to adherence with Consumer Duty regulations and the increasing focus on customer-centric, outcomes-based products and service.  

3. Driving up broker value

We discussed at length the importance of reinforcing the value of broker advice in a commoditised market. And, how technology can augment the personal touch, not replace it.

Networks can assist by harnessing technology and data in ways that help brokers get closer to the clients – tailoring outreach and aligning value with client needs for a more personalised experience, spotting and addressing gaps in cover or underinsurance issues across their book, delivering meaningful opportunities to connect through the client lifecycle and maximising retention through upsell/cross-sell opportunities.

4. Attracting and retaining independent broking talent

Just like the rest of the industry, brokers face a challenge in attracting and retaining talent.

Networks have a key role to play here, in attracting new talent, as well as driving entrepreneurialism at a time of increased market polarisation.

It’s about supporting the retention of the vital skills and experience that ensure independent brokers maintain their trusted advisor status, investing in helping new start-up businesses get up and running quickly and cost effectively, and offering sustainable routes for those looking to exit the industry with a viable succession strategy in place.

5. Networks have an opportunity to drive the industry forward

But only if they modernise. Networks have never been more relevant, but they must evolve and invest in new ways to maximise the ease of trading for their members.

How can FullCircl help?

We can help Networks maximise the ease of trading for their members, protect independent brokers, and differentiate themselves in an increasingly competitive market.

With FullCircl SmartBroker - either as standalone member benefit or as an integration within Acturis - your members could achieve:

• 80% increase in new business
• 94% faster client onboarding
• 500%-time reduction in policy review processes
• Over 1,000 hours total time savings annually
• 95% renewal retention rate

Get in touch with our specialist insurance industry success team to find out more.

The principal finding of the inaugural report of the CFIT Open Finance Coalition was that substantially more lending could be made to small businesses, and significant increases in lending acceptance rates made possible, with the timely provision of more high-quality, reliable data to lenders.  

It suggested over 25% of SME loan applicants who had been referred for manual underwriting and would potentially have failed to receive an offer of credit, could justifiably be given access to finance.

There are over 5.5 million SMEs in the UK, and around 30% of these have sought finance during the last three years, according to The British Business Bank. This equates to approximately 1.7 million businesses. Shockingly, not only access to funding difficult, but over 50% of SMEs whose applications are declined do not seek alternative lenders.

On the other side, a key struggle for lenders is limited visibility into a customer’s total financial exposure. With over, lenders often lack a complete picture of outstanding debts, affordability, and liquidity - leading to blind spots in risk assessment.

This presents a huge opportunity for traditional banks, credit, and finance institutions, as well as digital challengers and other alternative lending providers who actively invest in innovative funding strategies.

Demand for finance is growing as businesses seek working capital to assist with rising energy costs, supply chain disruptions, the high costs of wages, and the uncertainty of global trade tariffs. As well as for investment ingrowth and development of new products and services.

The CFIT suggests the benefits of better access to data include:

• Better and quicker risk assessments and application decisioning
• Improved customer experience
• Reduction in financial crime
• Increased proportion of creditworthy applications, and therefore improved supply of credit

A single source of truth of lenders

Whilst there is of course an abundance of data avaliable to funding providers, the challenge is having that data orchestrated, augmented, and validated in a way that drives better and faster funding decisions.

With tightening regulations, lenders need to be able to implement faster, data-driven risk assessments to mitigate risk, improve decision-making and strengthen customer relationships.

A single source of truth means the ability to consolidate and harmonise data - i.e. create a unified source of customer intelligence that is up-to-date, accurate, consistent, and reliable. This facilitates informed funding decision making by providing a complete view of a business, its level of indebtedness, affordability and credit risk, as well as insight into the individuals within it.

The best way to achieve this is via a single data orchestration platform. An augmented and validated ‘intelligence everywhere’ approach that delivers a complete view of a business’s financial situation, including the individuals within it. This empowers better funding decisioning at every stage of the lending lifecycle – from acquisition to application, from funding to retention and growth.  

The benefits:

• Task automation, reduction in manual processes, streamlined workflows
• Faster loan processing and approvals smoother, more efficient lending experience
• High loan volumes
• Improved regulatory compliance
• Higher long-term customer value

Best practice examples of data driven lending

Thincats deployed a single platform approach to streamline processes, reduce complexity, accelerate loan completion, and enable faster access to capital for SMEs. As a result, they've achieved a 60% reduction in data entry and manual input time, a saving of 166 minutes per lending journey, along with a better experience for loan applicants.

“The project has delivered significant enhancements to our systems and processes…we have shortened loan completion processes allowing us more time to focus on the deal and improve experience for customers.” Liam Murphy, Head of Change at ThinCats.

Tide sought a new way to balance customer experience with the need to gather and assess as much data and insight on SME customers as possible. Powered by single platform data orchestration, Tide now surfaces actionable insights from multiple data sources – credit scores, Delphi scores, payment data, CCJ history, shareholder data – to qualify applications and assign the right products based on the specific needs of SME customers, whilst limiting lengthy applications processes and delivering a personalised experience.  The result has been a 72% increase in the number of loans it processes annually, and a 10-minute average time saving per application. Application forms are now populated in under 2 minutes.

“By employing a more streamlined data strategy we believe we’ve optimised our capabilities moving forward and can remain the largest credit marketplace in the UK.”  Thomas Boyd, Head of Partnerships at Tide.

FullCircl can help your business lend smarter

We aggregate, enrich and validate data from the widest possible range of sources to deliver a single source of truth for faster and more accurate lending decision making:

• Build more accurate financial profiles of business customers
• Gain a total market view of indebtedness, affordability and credit risks
• Get a clarity of business ownership and group structure
• Stay ahead of regulatory and compliance risks
• Eliminate onboarding friction
• Accelerate loan application processes
• Continuously monitor customers at every stage of the lending lifecycle for enhanced experiences

Talk to us about our SmartBanker, SmartOnboard and how we can help you access all the data and insight you need to take business funding to new level.

Know Your Customer, or KYC, is a critical aspect of compliance, risk management and financial crime prevention for all financial institutions and other regulated businesses.

Operating in an increasingly uncertain global economy, battling ever more sophisticated and tech savvy financial criminals, and feeling the pressure of regulatory scrutiny, strong KYC processes are the frontline of defence for organisations seeking to improve risk mitigation, protect themselves against fraud, corruption and money laundering, and ensure adherence to regulatory obligations.

KYC is also an important aspect of customer experience. Strong KYC checks are key to understanding customer needs, opportunities, and pain points, establishing trust, enhancing experience at every stage of the customer lifecycle, and reducing cost to acquire and serve.

This is your ultimate guide to the what, the why, and the how of KYC.

‍What does KYC mean?

Know You Customer (KYC) refers to the policies and procedures put in place by businesses to manage risk and verify the identities of customers at onboarding stage, and for advanced client lifecycle management – acquire, onboard, originate, monitor retain and grow.

‍Why is KYC important?

Without strong KYC processes, financial institutions and regulated businesses can suffer:

• Increased regulatory and operational complexity, which can result in onboarding times of 100 days
• Escalating risks of financial crime and fraud: UK banks and fintech's alone spend £21.4k per hour fighting financial crime and fraud, pushing the UK's annual compliance bill to £38.3bn (equivalent to GDP of Estonia)
• Inability to meet rising customer expectations: 58% of clients are lost because of slow and complex onboarding
• Fines and penalties: The Financial Conduct Authority (FCA) issued three significant fines to financial institutions for critical compliance failings in 2024 totalling almost $65 million, with total global penalties standing at $4.6 billion.

Importantly, KYC is critical to the delivery of superior client lifecycle management.

KYC processes:

• Build trust by demonstrating a commitment to security and risk management
• Improve customer confidence by mitigating and preventing financial crime
• Allow for more personalised experience through a deep understanding of needs
• Ensure frictionless onboarding for faster time to value
• Help build long terms profitable relationships

Is KYC a legal requirement in the UK?

In the UK, compliance with KYC regulations is monitored by a range of regulatory bodies and government agencies including the Financial Conduct Authority (FCA), Prudential Regulation Authority (PRA), National Crime Agency (NCA) and HM Revenue and Customs (HMRC).

Key regulations include:

• The Economic Crime and Corporate Transparency Act 2023
• Financial Services and Markets Act 2023
• Proceeds of Crime Act 2002
• The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

The UK regulatory environment for KYC compliance is aligned with the global standards set by the Financial Action Task Force (FATF).

What is required for KYC verification?

In the UK, financial institutions and regulated entities must collect and verify a range of documents on business customers during KYC processes:

• Proof of identity
• Proof of incorporation
• Tax identification
• Proof of address
• Identity and address verification of all stakeholders, shareholders, ultimate beneficial owners (UBO), and persons with significant control
• Bank statements, income tax returns, annual reports

Advanced KYC processes also include:

• Adverse media monitoring
• Politically Exposed Persons (PEPs) and sanctions checks
• Group structure - identification and visualisation of parent and subsidiary
• companies
• Digital identity verification - biometric comparison, optical character recognition
• Electoral roll and mortality checks
• Credit reference data

What are 5 steps of KYC?

1. Customer Identification

Financial and regulated business must ensure that the individuals and entities they are dealing with are who they claim to be.  

For individuals this typically involves the collection and verification of a variety of official documentation (proof of address, photo identification, passport, driving license, employment information), biometric authentication, and database checks.

For entities, the process involves collecting and verifying a range of information and documentation, including company registration documents, business licenses, director information, proof of address, nature of business and ownership structure (ultimate beneficial owners, shareholders); as well as database searches for potential AML red flags such as sanctions and Politically Exposed Persons (PEPS) lists, and adverse media screening.  

2. Customer Due Diligence (CDD)

Financial and regulated businesses must next carry out CDD-related KYC checks to gather and evaluate additional customer information. The aim is to better understand the nature of the customer’s business, potential risks they pose, and potential involvement in illegal activity.

When carrying out CDD measures, organisations must verify the customer identity, identify and verify beneficial owners, understand the ownership and control structures, access and obtain information pursuant to the purpose and nature of the business relationship, and build risk profiles based on an understanding of the nature and purpose of anticipated transactions.

3. Enhanced Due Diligence (EDD)

In addition, for customers considered to be of high-risk, businesses should undertake enhanced due diligence (EDD) - a risk-based approach to investigation and the gathering of more detailed intelligence.  

High-risk customers might include, for example, those subject to economic sanctions or operating in countries without adequate AML controls, customers with complex ultimate beneficial ownership structures, companies managed by politically exposed persons (PEPs), businesses operating in countries with significant levels of corruption, criminal or terrorist activity.  

EDD measures include adverse media screening, obtaining additional identifying information, analysing the source of funds, scrutinising Ultimate Beneficial Ownership (UBO) and transaction screening.

4. Ongoing Monitoring

Customer behaviour changes and risk profiles evolve. Ongoing monitoring, sometimes referred to as Continuous Due Diligence, Ongoing Customer Due Diligence (OCDD) or Perpetual Due Diligence (PDD), includes an in-life customer monitoring approach, based upon risk events and triggers for maintaining KYC checks and monitoring customers for the risks they pose related to AML and other financial crimes.

This involves monitoring and evaluating changes in customer profiles, business activities, ownership and organisation structures, legal status as well as sanctions and PEPs watchlists screening, adverse media screening, payment and transaction monitoring.

5. Reporting and regulatory compliance

Financial and regulated businesses have a duty to report suspicious or nefarious activity uncovered during KYC processes. Organisation must submit a Suspicious Activity Report (SAR) to the National Crime Agency (NCA) if they know, suspect, or have reasonable grounds for knowing or suspecting, that a customer or potential customer is engaged in, or attempting, money laundering or terrorist financing. 

It is important for financial and regulated business to stay ahead of all regulatory changes and update their KYC policies and processes accordingly.

What are the different types of KYC?

KYC can be broadly categorised into traditional or digital processes:

• Traditional KYC is typically highly-manual and time consuming, involving in-person verification of physical documents.
• Digital KYC also known as eKYC, is digitised and automated form of KYC verification, with the capability to verify customers remotely in a faster, more accurate way compared to traditional KYC processes.

What software can help with KYC?

There are a range of software solutions that can help ensure KYC policies and processes are implemented and conducted effectively. These include third-party data providers, identity verification tools, AML screening solutions, data analytics, and so on.

By far the best solution is a single end-to-end KYC compliance platform that streamlines and optimises the entire KYC process, from initial customer interaction to ongoing monitoring, including KYC and KYB checks, AML, IDV and anti-fraud tools.  

A single KYC orchestration platform integrates the various KYC processes into a unified workflow across the five steps, to remove friction for legitimate customers whilst increasing scrutiny for higher-risk businesses and individuals.

This approach avoids the headaches associated with multiple integrations and supplier contracts, saving time and money, improving accuracy, enhancing compliance, and minimising risk.  

Ready to take your KYC efforts to the next level?

FullCircl is an award-winning KYC orchestration solution designed for businesses seeking to verify and authenticate the identity of customers in the most streamlined and accurate way possible.

• Seamlessly integrate KYC checks, AML screening, advance identity verification, fraud prevention, and credit risks screening
• Automate real-time decision-making with unified workflows for the ultimate risk-based approach to KYC
• Improve onboarding speeds and customer lifecycle experiences whilst reducing cost to acquire and serve.

Contact us to book a demo.

Within regulated industries, the terms KYC (Know Your Customer) and AML (Anti-Money Laundering) are often used interchangeably, but they refer to distinct processes with unique purposes.

Understanding the difference between KYC and AML is critical for businesses to ensure compliance, mitigate illicit activity and financial crime, and maintain a positive reputation in the market.

The origins of AML and KYC can be traced back to the establishment of the U.S. Bank Secrecy Act in 1970, and since then have evolved to become a crucial element of account opening, identity verification, and fraud prevention.

Regulated entities, including banks, financial services, crypto exchanges, gambling operators, e-commerce, and more are required to perform KYC and AML on every customer, navigating cross-jurisdictional nuances in regulation and rising customer expectations.

In this article, we explore the definitions, applications, regulations, and difference between KYC and AML, providing a comprehensive overview to those seeking to understand the processes and how to effectively implement them.

What is KYC?

Know Your Customer, or KYC, is a process that regulated businesses need to implement to verify customer identity.

This involves collecting and analysing personally identifiable information such as name, address, date of birth, and identity documents including passport and driving license. KYC checks are conducted at the beginning of the customer lifecycle, during account opening or customer onboarding. However, ongoing monitoring is also essential to detect any suspicious activity or changes in customer behaviour.

The primary goal of KYC is self-explanatory, to receive, verify, and analyse data on customers to ensure they are who they say they are.

In the context of corporate KYC, or Know Your Business (KYB), the primary goal is to analyse financial reports, credit, beneficial owners, and degree of risk by partnering with another business.

By effectively implementing a robust KYC process, regulated businesses can prevent identity theft, fraud, and other financial crimes by gaining an effective overview of each customer.

What is Anti-Money Laundering (AML)

Anti-Money Laundering, or AML, encompasses a broader set of regulations and procedures designed to prevent money laundering and terrorist financing.

AML regulations require regulated businesses to screen individuals and businesses at the point of onboarding, report suspicious activities, monitor transactions, and maintain records to ensure transparency and accountability.

In the context of screening at the point of account opening, onboarding, and point of payment, AML typically involves screening individuals to discover if they are Politically Exposed Persons (PEPs), sanctioned, or possess adverse media.

AML processes are continuous and involve various stages of the customer lifecycle. Regulated businesses must conduct Customer Due Diligence (CDD), Enhanced Due Diligence (EDD) for high-risk customers, and ongoing monitoring to detect and prevent illicit activities. AML compliance is mandatory for all entities involved in financial services.

What is the difference between KYC and AML?

While KYC and AML are often used interchangeable to describe the identity verification and wider financial crime prevention process, KYC serves as a subset as AML.

KYC focuses specifically on verifying a customer’s identity, while AML covers a wider range of activities aimed and preventing money laundering and financial crime.

KYC compliance is the first step of the AML, providing the necessary information for businesses to monitor and assess customer risk.

Once KYC has been successfully performed, AML will then involve screening at the point of onboarding against PEPs, sanctions, adverse media, and watchlists. But the process doesn’t stop there, as customers need to be re-screened to be notified of any changes in risk profile, transactions need to be monitored, and Enhanced Due Diligence (EDD) may be required for higher risk cases.

Understanding not only the differences between KYC and AML but how both processes can work co-operatively leads to numerous benefits, including:

• Integrated compliance: Effectively combining KYC and AML within a compliance framework leads to more efficient data flow, easier analysis, and robust accountability.
• Cross-functional collaboration: In larger organisations, different teams may be responsible for KYC and AML. Understanding the objectives for each and how to split responsibilities leads to more effective collaboration and slick operations.
• Regulatory compliance: As regulation becomes more stringent globally and changes to regulation become more commonplace, understanding how changes impact KYC, AML, or both processes is critical to remaining compliant.

How does KYC and AML implementation differ?

The implementation of KYC and AML can differ significantly depending on the method used by businesses.

For a KYC check to be performed, the business will need access to at least name, address, and date of birth, with the addition of Government approved ID documents to help find a more effective match.

An AML check only requires a name, but it is helpful for the business to also have access to date of birth and address to better narrow down potential matches and reduce false positives.

A KYC check typically used credit information (such as electoral roll, telco, etc.) so plugging into Credit Reference Agency data is a common method. AML on the other hand requires Politically Exposed Persons and Sanctions list, and adverse media so the data sources can vary significantly.

The emergence of data aggregators has become a popular choice for regulated entities as they can plug in to multiple data sources through a single access point, providing access to data required for both KYC and AML.

The responsibility of KYC and AML usually sits with the compliance team, but in bigger organisations they can also be separate responsibilities between MLRO’s, compliance, onboarding, and others, therefore reinforcing the importance of understand the differences.

KYC regulations vs. AML regulations

One of the trickiest parts of navigating KYC and AML is cross-jurisdictional regulation. Whilst all regulation and regulatory bodies have the same goal of preventing financial crime by imposing strict regulation, there are various nuances between regulation that can make compliance difficult for businesses operating in multiple jurisdictions.

Here are some of the most notable regulations:

6th Anti-Money Laundering Directive (6AMLD) – European Union

Effective from 202, 6AMLD increases the number of offences linked to AML and KYC non-compliance, reduces transaction thresholds for fines, and enhances penalties for violations.

Bank Secrecy Act (BSA) – United States

One of the original AML regulations, the BSA was enacted in 1970, requiring financial institutions to maintain records and report suspicious activity to help prevent money laundering.

Patriot Act – United States

Introduced in 2001, the Patriot Act expanded KYC and AML requirements, including Enhanced Due Diligence for foreign accounts and increased cooperation between regulated entities and regulators.

Financial Action Task Force (FATF) Recommendations – Global

FATF sets global standards for AML and counter-terrorist financing (CTF), including guidelines for KYC and processes and Customer Due Diligence (CDD) that local regulators can build regulation from.

Some of the major regulatory bodies include the Financial Conduct Authority (FCA) in the UK, Financial Action Task Force (FATF) globally, Financial Crimes Enforcement Network (FinCEN) in the United States, and the European Banking Authority (EBA) in the European Union.

What are the risks that KYC addresses vs. AML?

As KYC is used to verify the identity of customers, some of the key risks it identifies are:

• Identity theft: KYC processes verify the identity of customers through documents and data, ensuring they are who they claim to be.
• Fraud: By verifying customer information and conducting due diligence, KYC helps detect and prevent fraudulent activities and accounts.
• Operational risks: Effective KYC procedures streamline customer onboarding, improving operational efficiency and providing customers with a slick onboarding experience.

In contrast, some of the risk AML addresses are:

• Money laundering: AML processes identity high-risk individuals, monitor transactions and report suspicious activities, helping to detect and prevent money laundering.
• Terrorist financing: AML regulations require regulated businesses to identity and report transactions that may be linked to terrorist financing.
• Reputational risk: Adhering to AML regulations and identifying bad actors that you shouldn’t be doing business with help protect an organisation’s reputation.

This further strengthens the case to understand the differences between KYC and AML, as both processes help identity different risks posed to businesses but also by having the two processes work harmoniously bolsters compliance efforts.

Are there any technologies that support both KYC and AML?

As demand for secure KYC and AML has grown from regulators and customers alike, the pressure on regulated entities has risen to perform robust KYC and AML as efficiently as possible.

That’s where the emergence of data aggregation platforms and specialist RegTech firms has been established as a key player in the market.

Businesses such as FullCircl provide automated, real-time KYC software and AML solutions to assist regulated businesses in the constant fight against financial crime.

With a data agnostic approach and single access point, regulated businesses can customise the KYC and AML process, ensuring that not only regulatory obligations are met by integrating to leading data sources, but also that customers are given the best possible onboarding journey with real-time checks.

Want to discover more on enhancing your KYC and AML process? Speak to the team today.

Let’s put it out there right from the start – your Customer Lifecycle Management (CLM) journey has become increasingly complex, expensive, and difficult to navigate.

You’re not alone. After all, we live and work in a time of never-ending change.

The challenges facing financial institutions (FIs) continue to multiply and evolve – shifting economic and geopolitical conditions, growing regulation and operational complexity, intense competition, fast-paced technological advancement, escalating financial crime and fraud risks, credit risks, a volatile talent market. And of course, a profound shift in customer expectations and a fundamental reshaping of how financial institutions must interact with their customers across every stage of the lifecycle.

In the face of all these challenges, FIs must be on the lookout for emerging opportunities to grow and retain a profitable customer base. Opportunities that go beyond traditional technology integrations and instead deliver a truly unified CLM approach that empowers them to be more adaptive, responsive, and agile to the pace of change.

The status quo is unsustainable. It's costing banks an average of $20,000-$30,000 to onboard new commercial customers, and a further $25,000 can be lost due to delays in acquiring new them.  Meanwhile FI’s are shouldering a global financial crime compliance cost of $206.1bn, plus a staggering £38.4 billion regulatory compliance price tag.

It’s time to embed intelligence everywhere and usher in a new era of Client Lifecycle Management.

Is there a better way to serve clients throughout the lifecycle?

Before we get to that, let’s first understand what we mean by CLM and why it’s so important for financial institutions.

Client Lifecycle Management, or CLM, refers to how FIs manage the end-to-end client relationship, from acquisition and initial onboarding to ongoing interactions and due diligence monitoring. At each stage, ensuring clients receive a compliant, smooth and personalised experience.  CLM is important because, when done well, it enables FIs to attract more of the right clients, improve retention, build trust and loyalty, mitigate risks and ultimately enhance both profitability and regulatory compliance.

So why is a new approach needed?

We’ve mentioned the diverse range of emerging challenges facing FIs. But then add to that the compounding impact of outdated technology, disparate processes, risks of human error, siloed data, lack of a single client view, and an inability to create more value and operationalise the huge amounts of data FIs have access to.

No wonder CLM journeys are increasingly complex, expensive and difficult to navigate.

What does the future of CLM look like?

The future is a recalibrated CLM strategy that moves financial institutions from manual and inefficient processes to a data-driven, AI-powered and automated approach. One that addresses all their key challenges, unlocks significant value, improves operational efficacy, and frees up human capital for strategic decision making.

Marc Benioff famously said, “data is the new gold”. For FIs, nowhere is that statement more relevant right now than in the transformation of their CLM strategy.

Think the leveraging of deep data resources and advanced AI for transformative insights that enable smarter, faster decision making, enhanced regulatory compliance, proactive continuous risk management, and the delivery of highly-personalised experiences. Whilst at the same time bringing down the cost to acquire and serve, eliminating duplication of effort and manual processes, and improving agility and competitiveness in an ever-changing regulatory landscape.

Navigate cost and complexity - the benefits of intelligence everywhere CLM at every stage of the customer journey

• Acquire: Identify, visualise, and target the entire customer universe through advanced market intelligence, automated customer insights, and the delivery of highly-relevant engagement signals. Augment CRM environments with real-time data orchestration to improve prospecting and enhance sales and marketing interactions.
• Onboard: Orchestrate workflows, automate customer validation activities, execute KYC, KYB, and AML screening, and verify client identity all in one place. Perfectly balance customer experience and regulatory compliance, to reduce attrition, bringing down cost and time to acquire, eliminate the risk of errors, and meet demanding expectations.
• Originate: A streamlined application process that improves both efficiency and customer experience. Automate product applications, credit decisioning and underwriting, structure deals and documentation, and manage approvals and closing – streamline processes and reduce time to service and funding.
• Monitor: Leverage automation, real-time insights, and rules-based decisioning to proactively monitor and manage risk, improve experiences, and achieve continuous compliance. Seamlessly maintain real time 360-degree record of every customer, track portfolio and UBO changes, monitor AML compliance, stay ahead of sanctions screening, assess credit continuously, and maintain a complete audit trail.
• Retain: Enhance personalised support, proactive communication, and understanding the evolving needs of customers. Pivot quickly, aligning service delivery and interactions to changing requirements and market dynamics. Move from reactive to proactive account management, unlocking new opportunities to add value while reducing risk.
• Grow: Track customer progress, deepen relationships, expand the product footprint via relevant upsell and cross-sell, predict future needs, and enable next-level personalised experiences that foster trust and lasting loyalty.

The critical importance of reinventing onboarding

Nowhere is an intelligence everywhere approach to CLM more impactful than at onboarding stage.

With traditional banks facing off against their digitally-enabled challengers, improving the customer onboarding experience is key to sustainable, profitable growth.

Recent research uncovered that 38% of all new banking customers abandon the onboarding process if it takes too long. This is backed by our own research.

In our 2025 State of IDV report, we revealed the rate of abandoned sign-ups is potentially 2.9x greater than FIs estimate. The most common reason for this appears to be a total focus on regulatory compliance at the expense of customer experience; an imbalance could that be costing them dearly.

An intelligence everywhere approach creates a “wow factor” first impression - setting the tone, building trust, and defining the experience customers can expect to receive throughout the life of their customer relationship.

Wave goodbye to manual and cumbersome onboarding by automating the entire corporate onboarding process. Intelligence everywhere means FIs can meet regulatory compliance obligations whilst maintaining complete oversight and control over the experience the customer receives.

Welcome to a unified, data and AI-powered CLM platform that significantly accelerates the customer screening and verification process. Advanced data orchestration incorporating KYC, KYB, PEPs, sanctions, adverse media, email risk checks and identity verification allows FIs to manage all onboarding checks in one place - seamlessly guiding customers through onboarding in the most frictionless way possible. This reduces manual efforts and allows FIs to onboard more customers in less time, without compromising on either compliance or customer experience.

Proof of concepts already exists

Santander has seen a 75% decrease in onboarding effort by moving to a fully-digital journey, with time to onboard reduced from 14 to 5 days thanks to pre-population of customer data.

Metro Bank have automated business account opening to achieve an average opening time of just 15 minutes. They now onboard 11,200 new customers per year with 80% of applications going straight-through. On top of this, they were able to identify 14% more critical risk issues than their previous manual process, and were able to reduce average case time from 200 minutes to 8 minutes – a 94% improvement.

After automating much of their onboarding processes, Tide achieved a 72% increase in the number of SME applications processed in a 12 month period. Powered by advanced data orchestration, Tide can easily qualify applications and assign the right products based on the specific needs of SME customers, whilst limiting lengthy applications processes and delivering a personalised experience. In fact, application forms are now populated in under 2 minutes. This has contributed to a 90% increase in revenue.

ThinCats likewise adopted an intelligence everywhere approach to transform traditionally lengthy access to funding processes. As a result, they have achieved a 60% reduction in data entry and manual input time, and 166 minutes of total time savings per lending journey.

Are you ready for a new era of intelligence everywhere CLM?

CLM is a battleground for financial institutions in 2025.

The ultimate winners will be those that grasp the opportunity to redefine the path, and in doing so create better customer experiences at scale without compromising on compliance.

As a recent McKinsey report highlighted. “You’ve got to really be thoughtful about how and where to spend to get the most bang for the buck, particularly as it relates to tech.”

FI’s are being buffeted by a broad range of challenges, many of which are moving at pace and forcing them to evolve quickly. Those that invest in intelligence everywhere will reduce the cost and complexity of customer lifecycle management, thereby simultaneously boosting profitability, customer experience, and compliance.

Discover how nCino and FullCircl are powering a new era in financial services, reimagining client lifecycle management.