KYC obligations flow from anti-money-laundering frameworks — the EU's AML directives and incoming AML Regulation, the US Bank Secrecy Act, and equivalent national laws — which require regulated firms to know who they are doing business with before moving money for them.
Core components. Customer identification (name, date of birth, address, ID document), verification (matching the person to the document, increasingly via automated document-plus-selfie checks), sanctions and politically-exposed-person screening, and risk classification. Higher-risk customers trigger enhanced due diligence; business customers trigger KYB (Know Your Business), which adds company-registry and beneficial-ownership checks.
Ongoing, not one-off. Regulators expect continuous monitoring: transaction patterns that do not fit a customer's profile must be flagged, and stale identity data refreshed over time.
Where marketing platforms meet KYC. Any platform that pays money out — cashback, creator earnings, referral rewards — either becomes regulated itself or works through a licensed partner (a bank, e-money institution, or payment institution) that performs KYC on recipients. Verification requirements generally scale with payout volume and risk, so small rewards may need only light checks while larger balances require full identification.
Why it matters for brands
KYC determines who can actually receive your rewards and how quickly. Building payouts on a properly licensed rail means verification happens once, at the right threshold, instead of surfacing later as frozen funds, blocked payouts, and churned creators.