KYC (Know Your Customer)

Know Your Customer rules require banks, brokerages, cryptocurrency exchanges, and other financial services to collect and verify identity documents before allowing a customer to transact. Typical KYC involves government-issued photo ID, proof of address, and sometimes a selfie or video liveness check. The rules are designed to prevent fraudsters, money launderers, and sanctioned individuals from hiding behind fictitious or stolen identities.

From a consumer perspective, KYC has a dual significance. Legitimate institutions always require it — if a 'bank' or 'investment platform' lets you deposit without any identity verification, that is a red flag for a scam or unlicensed operation. Conversely, criminals exploit KYC processes by using stolen or synthetic identities to pass checks and open accounts used for fraud.

KYC data submitted to a company can itself become a target. Breaches of KYC databases are especially damaging because they expose the combination of full name, date of birth, document numbers, and sometimes biometric data needed to commit identity fraud.