What Are KYC Documents?

What Are KYC Documents? 

Know Your Business documents are records that are official, which are being collected by firms and regulators to verify that a customer is real. Another primary goal of collecting KYC documents is to assess the risk level of the customer and screen their transactions and accounts accordingly. Usually, for individuals, you will be asked for government-issued ID, proof of address, and for businesses, incorporation papers and beneficial ownership information (BOI) is needed. Since this verification process is part of customer due diligence (CDD), conducting the KYC verification check will ensure that you are complying with AML requirements. By verifying that your customers are real, these tools help during risk mitigation and regulatory adherence. 

Why Do They Matter?

KYC documents are a crucial part of AML and KYC compliance as well as customer identification programs (CIPs), and ensuring that you're not skipping this important step of collecting and verifying them will surely bring your company more security and create a more compliant framework. Your job of collecting and verifying these documents will help prevent identity theft, fraud, and other misuse of financial services. This process will also reduce regulatory risk since the verified documents you've collected will show your adherence to obligations and lower your chances of fines and more severe penalties. The BOI collection has updates after recent developmentes. FinCEN’s March 2025 interim rule suspends the domestic BOI requirement while it re-tools thresholds, but foreign entities still file within 30 days of registration.  Overall, the collection of these documents will help create a more transparent financial system which can better prevent financial crime.

How KYC Verification Works?

The KYC verification process involves companies collecting, validating, and monitoring customer information to help ensure AML and KYC compliance. The first step to the process is the identification documents and proof of address submission. These documents are then screened against sanctions, PEP, and adverse media lists. The customer is then assigned a risk score according to the information they presented and the results your company has gotten from screenings. If there are any anomalies with the documents, they are escalated for further review.

This process is there to help you create a safer and compliant company. By mid‑2025 regulators worldwide have already imposed more than $6 billion in anti‑money‑laundering (AML) fines on track for the costliest year on record.  These fines could affect your company in the case of inefficiencies regarding KYC document collection within your company.

Digital eKYC & Remote Onboarding

eKYC is another way of doing KYC verification that has risen in popularity in recent years given that the world is developing towards a more digital approach to daily activities. With eKYC, remote onboarding can be done using AI powered verification, automated checks of documents, and API integration which helps with real-time data validation. Sanctions and watchlist checks are also done within the digital KYC process, but using newer methods like biometrics and liveness detection. The digital approach helps enhance accuracy, reduce operational costs, and strengthen compliance.

This modern solution is especially helpful when it comes to cryptocurrency and digital platforms. According to our Sanction Scanner experts, KYC implementation reduces crypto fraud risk by 38%. The implementation of eKYC speeds up the KYC process while also reducing financial crime. The world is also moving towards implementing eKYC more. The Reserve Bank of India has started accepting and created a guidance for onboarding using Aadhaar-based e-KYC, video KYC, and DigiLocker documents in June, 2025.  Implementation of these ways for KYC shows that the hardships of manual KYC is being left behind by many countries. 

Examples of Common KYC Documents

KYC documents are different for individuals and companies. The purpose of collection is the same, however, let's investigate further our readers the different documents required. For individuals, prood of identity documents may include a passport, government-issued ID, driver's license. Proof of address can be utility bills, bank statements, or lease agreements. When it comes to corporate clients, you need to double check the company's existence and ownership structure. A Certificate of Incorporation, shareholder registers, and declarations of ultimate beneficial owners (UBOs) are needed. These documents are important for AML/KYC compliance.

On February 3rd 2025,  FCC proposed a nearly $4.5M fine against Telnyx LLC for apparent violations of Commission KYC rules resulting in fraudulent government imposter calls. The importance of these KYC documents is shown through the considerable amount of fine Telnyx LLC is facing.

Benefits of Automated KYC Document Handling

There are several advantages of using automated KYC document handling. Using AI and digital verification tools will help your company reduce human errors and improve customer records. Thanks to automation, you can conduct faster onboarding without losing customer trust or quality of process. Compliance costs are lowered by reducing manual labour and paperwork. The digital solution will also give you the chance to scale it accordingly when your company gets bigger.

Regulatory Requirements Around KYC

The global standard for regulatory bodies is set by the Financial Action Task Force (FATF). The regulatory body mandates CDD, filing of Suspicious Transaction Reports (STRs) and a risk based approach for monitoring both clients and transactions. In the EU, the Anti-Money Laundering Directice (AMLD) is there to require a unified KYC process from all member states. In the U.S. and UK, FinCEN and FCA respectively deal with regulations for AML compliance, mandating safe onboarding and ongoing monitoring. For VASPs and cryptocurrency platforms, the Travel Rule is also obligated. The rule demands that your company share the sender and receiver information of transfers that are above specific thresholds decided before. The crypto AML enforcement is a popular subject for regulatory bodies since it is a newer sector that is growing rapidly.

On May 23, 2024, FinCEN and the Securities and Exchange Commission (SEC) jointly released the CIP Proposed Rule that would require SEC-registered investment advisers (RIAs) and exempt reporting advisers (ERAs) to establish, document, and maintain written customer identification programs (CIPs) that closely track the customer identification requirements that currently apply to banks, broker-dealers, and mutual funds (among other financial institutions).  The establishment of this rule shows that KYC document collection is here to stay.

How Does Sanction Scanner Help Your Business?

Our Sanction Scanner team will help you reach AML/KYC compliance by serving you automated tools. The solution's real-time sanctions and PEP screening helps check your customers against more than 3000 global and local watchlists. Another feature we provide is risk-based customer profiling. Through this feature, we get a newer technology of dynamic risk scores. The system gets these scores by analysing transaction behaviour, geographic risk, and client characteristics. For higher-risk customers that are detected by this method, enhanced due diligence (EDD) is applied.

Sanction Scanner provides tools specific for KYC document management, like name screening, onboarding APIs, adverse media checks, and daily monitoring. These come together to create a strong compliance system. Finally, your company will always have audit-ready records thanks to Sanction Scanner, ensuring you're ready for potential inspections or investigations.