KYC Glossary

How these terms fit together

The vocabulary around identity verification is confusing largely because it mixes three different things: the law, the process, and the technology. AML — anti-money-laundering — is the law. It obliges regulated businesses to know who their customers are before moving money for them. KYC is the process those businesses run to satisfy that obligation. Everything else on this page is a piece of technology used somewhere inside that process.

The process is tiered. KYC levels determine how much proof is required, and the requirement rises with what you are allowed to do: an email address might open a viewing-only account, a government ID unlocks trading, and a proof of address or a source-of-funds document unlocks higher limits. When a platform suddenly asks for more paperwork, you have usually crossed a threshold rather than done anything wrong.

The technology sits underneath. OCR reads the text off your document. Facial recognition compares the selfie to the photo on it. A liveness check confirms the face in front of the camera belongs to a present, moving person rather than a photograph or a replayed video. 2FA is unrelated to identity proof — it secures the account afterwards — but it is often demanded in the same flow, which is why people conflate the two.

Each term below links to a full explanation, including what typically goes wrong at that step and how to correct it.