What is KYC ?
KYC (Know Your Customer) refers to all the procedures used to verify a customer’s identity. It is a requirement, established by the ACPR (French Prudential Control and Resolution Authority), imposed on financial institutions, payment service providers, and certain online platforms.
This verification process relies on collecting and verifying reliable information, such as the client’s identity or the nature of their business. The goal is to ensure that the client is indeed who they claim to be.
This system plays a central role in the fight against fraud, money laundering, and terrorist financing. Used by financial institutions, payment service providers, and marketplaces, KYC is an essential foundation for securing transactions, limiting fraud, and building lasting trust with customers.
What information is collected as part of KYC ?
As part of KYC, companies collect specific information to verify customer identity and assess regulatory risks.
Note that the information requested varies depending on the nature of the activity or the level of risk.
The data primarily concerns the customer’s identity:
- First and last name,
- Date and place of birth,
- Nationality.
Supporting documents are then required to validate this information, such as:
- Valid form of identification,
- Tax notice,
- Proof of address.
Additional information may be collected, such as:
- Professional activity,
- Beneficiaries,
- Origin of funds.
How does the KYC process work ?
The KYC process relies on several successive steps aimed at verifying the identity of the client and assessing the level of associated risk.
The steps are as follows :
- Information collection : the client transmits their personal or professional data as well as the required supporting documents via an online form or a secure space.
- Identity verification : the information and documents provided are checked, either manually or using automated tools. This step verifies the authenticity of the documents and the consistency of the data.
- Risk assessment: the client profile is analyzed according to regulatory criteria in order to detect potential risks
- Validation and onboarding: Once the checks are completed, the authorized customer can access the services. In case of an anomaly, additional checks may be requested.
- Monitoring and updating : KYC doesn’t end with registration. Information must be updated regularly to ensure ongoing compliance.
KYC and KYB : what’s the difference ?
KYC (Know Your Customer) and KYB (Know Your Business) are two verification procedures, but they do not target the same entities and respond to distinct obligations :
- KYC : This concerns individuals. Its objective is to verify a client’s identity and prevent fraud, money laundering, and the financing of terrorism. The information collected includes identity documents, address, employment status, and sometimes the source of funds.
- KYB : This applies to companies and legal entities. It allows verification of the company’s legal existence, its activities, its directors, and its beneficial owners. Typical documents include the articles of association, the commercial register, and information on the directors.
KYC/KYB and marketplace
Marketplaces, by connecting sellers and buyers, fall within the scope of highly regulated activities. They carry out payment processing operations on behalf of third parties, using payment accounts for each merchant, which makes them similar to financial institutions.
Monitoring, both of sellers and financial flows, is essential. Whether they have ACPR approval or work with a PSP, KYC/KYB data collection is a legal obligation, subject to criminal or administrative penalties for non-compliance.
KYC is particularly well-suited for C2C marketplaces to verify consumer identity, secure transactions, and prevent fraud. KYB, on the other hand, applies to B2C marketplaces to verify the identity of companies wishing to sell on the platform, as well as that of their directors and beneficial owners.
By using a payment service provider (PSP) like CentralPay, the KYC/KYB process is simplified thanks to the handling of identity verification and compliance, merchant account creation, and throughout the entire relationship. This relieves the burden on marketplaces, allowing them to fully focus on their core business.
KYC Automation
KYC automation is transforming how businesses verify customer identities. Thanks to technology, the process is becoming faster, more secure, and better suited to online use.
Among the main developments :
- Remote verification : customers can submit their documents and take identification selfies directly from their smartphone or computer, without physical travel.
- Automation and AI : systems instantly analyze documents and detect potential anomalies or fraud using artificial intelligence and optical character recognition (OCR).
- Enhanced user experience : Digital KYC reduces friction, accelerates onboarding and simplifies the management of regular updates to customer information.
Un onboarding sans friction avec CentralPay
CentralPay simplifies customer and seller onboarding with fast and secure processes. Marketplaces can automate KYC and KYB information collection, reduce verification times, and minimize friction for the end user.
The main advantages :
- Onboarding portal: Secure online space where each merchant can enter their KYC information before the teams check it.
- Automated verification : identity documents, company information and beneficial owners checked in real time.
- A smooth customer journey : simplified entry, clear instructions and quick validation to improve the user experience.
- Integrated compliance : meeting legal and regulatory obligations without complex manual intervention.
- Suitable for all marketplace models : B2C, B2B or C2C, with automatic management of financial flows and commissions.
