What is Know Your Customer (KYC) and How Does It Work in the Financial Sector?


Customers are the driving force behind a company’s success and growth. However, there may occasionally be individuals with malicious intentions that can become a threat to your business.

“One in five companies reported that their worst incident was caused by a customer, leading to significant financial impact on the company.” (See source)

Given this situation, businesses need protection against potential threats to ensure they feel secure.

This is where KYC (Know Your Customer) comes into play. It’s a process that allows you to verify your customers and confirm they are who they claim to be. With WANNME, you can implement KYC in your business today and feel secure forever.

But first, if you want to know what KYC is, how it works, the benefits it offers, which institutions are required to apply it, and all the information you need to protect your business, keep reading our blog!


What is KYC?

KYC is a verification process that allows for the collection, verification, and validation of customers’ personal and financial information. Its goal is to ensure the identity of customers and that the transactions they conduct are legitimate and lawful.

This verification process is essential in any industry but plays a crucial role in Fintech, as it is a critical step in detecting risky profiles and determining whether a customer meets the company’s legal requirements.

An example is when a customer decides to open a bank account. Before this can happen, the bank conducts a series of KYC processes and, once the account is opened, continuously monitors transactions to ensure compliance with regulations.


How Does the KYC Process Work?

To meet KYC requirements, companies must follow a verification process involving several key steps to confirm a customer’s identity:

Collection and Analysis of Basic Information:

Customers must present documents or evidence for identification. Politically exposed persons, for example, must confirm and document their status due to their higher risk of exposure to bribery or corruption.


  • Facial Biometric Recognition:

In cases where higher protection and security are required, facial biometric verification may be necessary.

  • Identity Verification:

The authenticity of the submitted documents and the accuracy of the provided information are verified. This step not only confirms the customers’ identities but also protects them from potential impersonation.

  • Risk Assessment:

To provide a secure service, the risk associated with each account is evaluated. This helps implement additional security measures for accounts that may present higher risks.

  • Ongoing Monitoring:

KYC is not a one-time process; it must be periodically updated to keep the information current.


Who is Required to Comply with KYC?

KYC is a verification process that should be applied across all industries. But which entities are required to comply with these requirements?


  • Traditional or digital banking institutions
  • Fintech companies
  • Lenders and credit unions
  • Virtual wallets
  • BNPL (Buy Now, Pay Later) services
  • Mortgage credit societies
  • Online gambling platforms like virtual casinos or e-games
  • Crypto wallets, whether standalone or linked to exchange platforms
  • Real estate agents

It’s important to note that some companies and entities might be subject to additional conditions based on their jurisdiction and the type of services they offer.


Benefits of Know Your Customer

Discovering the benefits of this process is as quick as integrating WANNME into your business!

Simplification and Speed in KYC Verification: Companies use technology to streamline and speed up the KYC verification process, reducing (or even eliminating) physical documentation and cutting down waiting times.

Regulatory Compliance and Customer Trust: The KYC verification strategy complies with financial regulations and builds customer trust through investments in technologies that ensure security and compliance.

Enhanced Customer Experience: KYC verification improves the customer experience by simplifying account opening and access to financial services, reducing friction, and fostering long-lasting relationships based on trust and convenience.

Data Security and Protection: The KYC verification strategy focuses on data security and protection, safeguarding customers’ personal information and preventing fraud by adhering to the highest security standards.


Frequently Asked Questions (FAQs)


What happens if a customer refuses to provide the required information during the KYC process?

There are no direct penalties; the customer simply won’t be able to use certain services on the platform or complete the registration process. For example, on investment/trading platforms (eToro, Binance…), a person can register and view all asset information and investment options. However, they cannot deposit money or trade/invest until they complete the KYC verification.

At Wannme, the first step of onboarding a new customer involves registering them on our portal with the option to upload the required documents and information. Once completed, they gain access to all contracted modules and functions.


What are the penalties for not complying with KYC requirements?

There are no direct sanctions. The consequence of not completing KYC requirements is that the customer won’t be able to access certain products or services.



With just one click, WANNME integrates into your business as your perfect partner. Compliant with GDPR, it verifies your customers’ data and ensures you only have real customers. This not only protects customer confidentiality but also creates a relationship of trust and credibility between them and your company.

So, if you’re looking for a payment and collection solution that offers protection, WANNME is your choice! It personalizes, customizes, and adapts the process from start to finish to enhance the customer payment experience.

Forget about paperwork and complex processes; integrate everything your business needs with a single API. Now we know that among other things, a verification system like KYC is essential to keep your business safe. Contact us.


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