How does KYC work?
The UK Money Laundering Regulations, regulation 28, describe customer due diligence as identifying the customer, verifying that identity on the basis of documents or information from a reliable source independent of the customer, assessing the purpose and intended nature of the business relationship, identifying any beneficial owner, and monitoring the relationship on an ongoing basis. For an online business that usually means database checks on name, date of birth and address, an identity document with a liveness check, and for higher amounts a review of source of funds. For a business customer, such as a marketplace seller, it also means identifying the company and its owners.
Why does KYC matter for payments?
It decides who can move money, and how much. Many payment providers only accept verified customers, payout rails often require them, and providers pause payouts when checks are overdue. As an illustrative example: a marketplace that runs document checks only at the first payout holds 1,500 payouts a month for verification. Moving the document step to a cumulative sales trigger means most of those sellers are verified before they ask to be paid, and holds fall to a few hundred.
What is the trade-off?
Too much KYC too early loses genuine customers at sign-up; too little leaves fraud, chargebacks and money laundering exposure, and pushes the checks onto payouts. Tiered KYC levels are the usual compromise: light, fast checks first, deeper checks before larger amounts and payouts.
Where does Omno use it?
Omno does not run KYC. KYC status comes from the merchant’s own systems, often from a dedicated KYC provider, and Omno can take the token that provider issued and pass it to the payment providers that need it. The merchant sends it on each request as customer verification levels (customer.kyc.kycLevels in the API) and a kycVerified flag, which eligibility rules use to decide which PSPs and payout routes a customer can use.