Master AML and KYC requirements to speed up your account approval and start accepting payments faster
You open the onboarding portal for a new payment provider and face a long list of document requests: passports, shareholder registers, website screenshots, even projected transaction volumes. It feels like jumping through hoops just to start taking payments.
These requests aren’t random bureaucracy. They form part of two intertwined compliance checks: Anti-Money Laundering (AML) rules that track suspicious activity and Know Your Customer (KYC) measures that verify identity.
Regulators worldwide demand these safeguards, so you need to understand their key differences and why providers ask for specific information. That preparation cuts review times, reduces follow-up questions and gets you live sooner.
Five Key Differences Between AML and KYC/KYB
When you start accepting card payments, your provider will ask for documents that fall into two buckets: Anti-Money Laundering (AML) controls and Know Your Customer (KYC) checks. Each serves a different purpose and gathers different information:
| Aspect | AML (Anti-Money Laundering) | KYC/KYB (Know Your Customer/Business) |
| —– | —– | —– |
| Purpose | Detect and prevent money-laundering activity | Prove who a customer or business is |
| Focus | Ongoing monitoring of transactions and activities | Identity verification and business legitimacy |
| When it happens | At onboarding AND continuously throughout relationship | Primarily at onboarding, may be refreshed periodically |
| Data reviewed | Sanctions lists, adverse media, transaction patterns, business activities | ID documents, proof of address, business registration, ownership structure |
| Merchant impact | May require business activity descriptions, geographic disclosures | Requires submission of personal and corporate documents |
AML Focuses on Activity Monitoring
AML monitors what you do after your account goes live. Your payment processor screens your name and company against global sanctions lists and reviews transactions for patterns linked to money laundering.
Risk teams will ask about your business model, typical ticket size and monthly volume to build a baseline. When you provide a clear, honest description of how you make revenue, you reduce the chance of follow-up queries.
KYC/KYB Focuses on Identity Verification
KYC deals with people; KYB widens that lens to the company itself. You may upload government-issued photo IDs, recent proofs of address, certificates of incorporation, shareholder registers and similar records that prove ownership and control.
When you have these files ready before you apply, onboarding moves quickly. By validating identities at the gate, providers block fraudsters from ever entering the payment ecosystem, protecting your future chargeback rates and reputation.
Different Compliance Standards Apply
Processors apply a risk-based approach. Low-risk merchants usually pass through Customer Due Diligence (CDD) with basic verification documents. If you operate in higher-risk sectors, trade in large ticket sizes or sell to sanctioned regions, Enhanced Due Diligence (EDD) may kick in.
EDD can mean deeper questions about funding sources, more recent financial statements or independent verification of beneficial owners. Knowing whether your industry, geography or growth plans place you in a higher tier lets you prepare the documentation you need to make KYC go smoothly.
AML Requirements
AML is the set of laws, regulations and tools that stop criminals from ‘cleaning’ illicit funds through legitimate businesses. Your provider must confirm you and your owners don’t appear on global sanctions lists, a step mandated by regulators across every major market.
Robust controls protect both your business and the wider financial system from fines, frozen funds or reputational damage linked to money-laundering schemes.
You can view the process as a partnership: the more accurate your information, the faster you reach live status.
EU AML Framework for Cross-Border Payment Operations
The European Union’s approach to anti-money laundering has undergone significant reform, particularly affecting businesses engaged in cross-border payment activities. At the core of the reform is the establishment of the AMLA as a new European authority to combat money laundering, headquartered in Frankfurt.
Starting from January 1, 2028, AMLA will directly supervise 40 large, high-risk financial institutions EU-wide and support national authorities in combating money laundering and terrorist financing.
This represents a shift from fragmented national oversight to centralised European supervision. For cross-border payment businesses, this means consistent AML standards across all EU markets rather than navigating different national interpretations.
AMLA will facilitate joint analysis of cross-border cases by national Financial Intelligence Units (FIUs) and provide analytical and information-sharing solutions.
The AML package significantly tightens due diligence requirements with the AMLR imposing a five-working-day deadline for responding to FIU requests. Your compliance team needs systems that can generate reports quickly when cross-border transactions trigger monitoring alerts.
When you process payments between EU countries and third countries, expect additional scrutiny during customer onboarding and ongoing relationship management under the enhanced due diligence requirements.
Understanding KYC and KYB Requirements
Before processing payments, you must prove two things: the people behind your business are who they claim to be and the business itself is legitimate. Know Your Customer validates individual identities.
On the other hand, Know Your Business (KYB) reviews the company structure, ownership and legal standing.
Both protect you from fraud and help payment providers meet global regulations, but require different paperwork. When you have the right documents ready and submit clear, current copies, you prevent delays.
Key Components of Effective KYC and KYB Systems
A robust KYC programme is built on four fundamental elements that work together to protect payment businesses from fraud, money laundering risks and regulatory enforcement:
- Customer Due Diligence (CDD): Forms your risk assessment foundation. This involves evaluating each customer’s risk profile by understanding the source of funds, nature of business activities and expected transaction patterns. You must identify beneficial owners of entities opening accounts, verify the identities of anyone holding at least 25% of an entity and identify a control person for all legal entities.
- Enhanced Due Diligence (EDD): Applies to elevated risk scenarios. When clients or transactions are deemed high-risk—such as politically exposed persons (PEPs) or those from high-risk jurisdictions—EDD mandates deeper investigation. This includes more rigorous identity verification, ongoing monitoring throughout the relationship and detailed documentation that supports your risk decisions.
- Beneficial Ownership Identification: Prevents the misuse of complex structures. This component requires transparency about who actually controls business entities, cutting through layers of corporate ownership to identify real decision-makers. You must trace ownership chains, verify control relationships beyond simple shareholding percentages and document these findings for regulatory review.
- Customer Identification Programme (CIP): Establishes your verification standards. This systematic approach to identity verification includes collecting government-issued identification, proof of address and other relevant documentation based on customer risk levels. Your CIP should define acceptable documents, verification procedures and escalation processes when standard verification fails.
KYC Documentation for Individuals
Payment providers need documents from anyone with significant business control. That typically means owners with 25% or more shares, directors and authorised signers. Here’s what you’ll need:
- Government-issued photo ID: Passport, driving licence or national ID card (expired documents get rejected automatically)
- Proof of residential address: Utility bill, bank statement or council tax bill
- High-resolution colour images of each page, free of glare and cropped to document edges
Submit files with descriptive names and combine multi-page IDs into single PDFs. Most delays come from blurred photos, mismatched addresses or expired IDs. Verifying every relevant individual may feel repetitive, but it stops fraudsters hiding behind shell owners and speeds up screening checks.
KYB Documentation for Businesses
KYB confirms your company’s legal existence and ownership structure. Requirements vary by jurisdiction and business type, but providers typically want:
- Proof of formation: Certificate of incorporation or business registration documents
- Proof of business address: Recent utility bill, lease agreement or bank statement in the company’s name
- Ownership records: Shareholder register or cap table showing each owner’s percentage
- Financial evidence: Latest corporate bank statement or audited accounts proving active trading
- Business description: Products or services, revenue model and website URL
Keep corporate records current and properly signed to avoid last-minute document hunts that delay your payment processing approval.
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