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KYC Glossary – 100 Essential Know Your Customer Definitions

This KYC Glossary provides clear and practical explanations of key Know Your Customer (KYC), onboarding, identity verification, and customer risk management terms used by banks, fintechs, VASPs, and regulated entities globally.

KYC Glossary – Definitions 1–100

1. Know Your Customer (KYC)

Regulatory process used to verify customer identity, assess risk, and understand customer activities.

2. Customer Identification Program (CIP)

Initial identity verification conducted before onboarding a customer.

3. Customer Due Diligence (CDD)

Risk-based measures to identify and verify customers and assess their risk profile.

4. Enhanced Due Diligence (EDD)

Additional checks applied to high-risk customers to mitigate financial crime risk.

5. Simplified Due Diligence (SDD)

Reduced KYC measures applied to low-risk customers or products.

6. Identity Verification

Process of confirming a customer’s identity using documents or electronic data.

7. Digital KYC

Electronic verification of customer identity using online tools and databases.

8. Non-Face-to-Face Onboarding

Remote onboarding without physical presence of the customer.

9. Face-to-Face Verification

In-person verification of customer identity.

10. Customer Risk Assessment

Evaluation of customer risk based on identity, geography, and behavior.

11. Risk Rating

Classification of customers as low, medium, or high risk.

12. Beneficial Owner

Individual who ultimately owns or controls a customer.

13. Ultimate Beneficial Owner (UBO)

Person with final ownership or control over a legal entity.

14. Ownership Structure

Mapping of legal and beneficial ownership layers of an entity.

15. Control Structure

Explanation of who exercises decision-making authority.

16. Politically Exposed Person (PEP)

Individual with prominent public functions posing higher corruption risk.

17. PEP Relative

Immediate family member of a politically exposed person.

18. PEP Associate

Person closely connected to a PEP through business or personal relationships.

19. Source of Funds (SOF)

Origin of funds used in a specific transaction.

20. Source of Wealth (SOW)

Explanation of how a customer accumulated their total wealth.

21. Ongoing Due Diligence

Continuous monitoring of customer activity and risk.

22. Periodic Review

Scheduled reassessment of customer information and risk.

23. Event-Driven Review

KYC update triggered by significant customer changes.

24. Name Screening

Checking customer names against sanctions, PEP, and watchlists.

25. Sanctions Screening

Filtering customers against global sanctions lists.

26. Adverse Media Screening

Review of negative public information linked to a customer.

27. Watchlist Match

Potential or confirmed hit during screening.

28. False Positive

Incorrect screening match cleared after investigation.

29. True Match

Confirmed screening match requiring action.

30. Escalation

Referral of high-risk cases to senior compliance teams.

31. Compliance Officer

Person responsible for ensuring regulatory compliance.

32. Risk-Based Approach (RBA)

Applying controls proportional to customer risk.

33. High-Risk Customer

Customer requiring enhanced monitoring and controls.

34. Low-Risk Customer

Customer eligible for simplified checks.

35. Medium-Risk Customer

Customer requiring standard due diligence.

36. Customer Profile

Consolidated record of customer identity, activity, and risk.

37. KYC Refresh

Updating customer data periodically.

38. Documentation Verification

Checking authenticity of identity documents.

39. Proof of Identity (POI)

Document confirming who the customer is.

40. Proof of Address (POA)

Document confirming where the customer resides.

41. Corporate KYC

Due diligence performed on legal entities.

42. Individual KYC

Due diligence performed on natural persons.

43. Trust KYC

KYC performed on trusts and trustees.

44. Foundation KYC

Due diligence on foundations and similar structures.

45. Nominee

Person holding assets on behalf of another.

46. Power of Attorney

Legal authority allowing one person to act for another.

47. Geographic Risk

Risk associated with customer location or jurisdiction.

48. Product Risk

Risk arising from specific financial products or services.

49. Channel Risk

Risk from delivery channels such as online onboarding.

50. Customer Behavior Analysis

Review of customer transaction patterns.

51. Transaction Monitoring

Ongoing review of customer transactions.

52. Unusual Activity

Transactions inconsistent with customer profile.

53. Red Flags

Indicators of potential financial crime.

54. Suspicious Activity

Behavior that may indicate illegal activity.

55. Account Opening Controls

Checks applied before activating accounts.

56. Risk Appetite

Level of risk an institution is willing to accept.

57. Compliance Policy

Internal rules governing regulatory adherence.

58. KYC Framework

Structured approach to customer due diligence.

59. Regulatory Requirement

Legal obligations imposed by authorities.

60. Audit Trail

Documented evidence of compliance actions.

61. Record Retention

Storing KYC records for regulatory periods.

62. Customer Acceptance Policy

Rules defining acceptable customers.

63. Screening Threshold

Risk level triggering enhanced review.

64. Onboarding Approval

Formal authorization to onboard a customer.

65. Rejection

Decision to deny onboarding.

66. Exit Management

Process of terminating customer relationships.

67. De-Risking

Reducing exposure by exiting high-risk customers.

68. Compliance Training

Education of staff on regulatory obligations.

69. Internal Controls

Systems preventing compliance failures.

70. Independent Review

External or internal assessment of KYC systems.

71. Regulatory Inspection

Examination conducted by regulators.

72. Compliance Breach

Failure to meet regulatory requirements.

73. Remediation

Corrective actions after deficiencies.

74. KYC Technology

Tools supporting identity verification.

75. e-KYC

Electronic customer identification.

76. Biometric Verification

Identity verification using physical traits.

77. Liveness Check

Ensuring a real person is present.

78. Document Forgery

Use of falsified identity documents.

79. Identity Theft

Misuse of another person’s identity.

80. Impersonation

Pretending to be another individual.

81. Risk Scoring Model

Algorithm assigning customer risk scores.

82. Threshold Breach

Crossing predefined risk limits.

83. Compliance Culture

Organization-wide commitment to compliance.

84. Senior Management Oversight

Leadership accountability for compliance.

85. Board Responsibility

Board-level accountability for KYC governance.

86. Regulatory Guidance

Non-binding instructions issued by regulators.

87. Enforcement Action

Penalties imposed for compliance failures.

88. Monetary Penalty

Financial fine imposed by regulators.

89. License Revocation

Withdrawal of authorization to operate.

90. Compliance Reporting

Submission of regulatory compliance reports.

91. Regulatory Filing

Mandatory submission of information.

92. KYC Governance

Oversight framework for KYC operations.

93. Policy Exception

Approved deviation from standard policy.

94. Control Weakness

Gap in KYC control framework.

95. Risk Mitigation

Actions taken to reduce risk exposure.

96. Customer Lifecycle

Stages from onboarding to exit.

97. KYC Operating Model

Structure of KYC processes and teams.

98. Quality Assurance (QA)

Review process ensuring KYC accuracy.

99. Regulatory Compliance

Adherence to laws and regulations.

100. KYC Audit Trail

Complete record of KYC decisions and actions.