Know Your Customer (KYC) checklist: What to include and why it matters

Would you get into a car without knowing who’s driving? Probably not. It’s only natural to want to know whom you’re dealing with — especially when money, data, or trust is on the line.

A Know Your Customer (KYC) checklist works the same way. Before engaging with a customer, especially in a financial or regulated industry, it’s crucial to verify their identity. A KYC checklist is simply a structured set of procedures that businesses (often financial institutions) follow to identify clients, assess risk, and prevent fraud.

Much like confirming your Uber driver’s identity, following these procedures lets you verify multiple personal identifiers to stay compliant with AML (Anti-Money Laundering) and KYC regulations. Part of this responsibility includes understanding what an organization can do to keep its data safe — a question at the heart of every compliance and fraud-prevention program.

In this article, we’ll walk through a detailed Know Your Customer checklist and show how to automate your KYC workflow using secure, compliant digital forms. But first, let’s break down what an effective KYC program entails.

What are the pillars of a strong KYC program? 

A strong KYC program rests on three central pillars: customer identification, customer due diligence, and ongoing monitoring. Together, these pillars form the foundation of effective compliance and help organizations onboard customers safely and responsibly.

1. Customer Identification Program (CIP)

This step is all about confirming a customer’s identity — your mandatory “driver’s license check” before they get into the metaphorical car. CIP requires collecting and verifying essential information, such as

• Full name
• Date of birth
• Residential address
• Identification number (SSN, passport, tax ID, etc.)

The goal is simple: Verify the person (or business entity) is exactly who they claim to be.

2. Customer Due Diligence (CDD)

Once the customer is identified, the next step is to assess their background, expected financial behavior, and overall risk profile.

For higher-risk individuals, such as politically exposed persons (PEPs) or customers operating in high-risk jurisdictions, you’ll typically conduct Enhanced Due Diligence (EDD).

3. Ongoing monitoring

KYC isn’t a one-and-done task. Ongoing monitoring ensures

• Customer information stays accurate
• Transactions align with their expected profile
• Suspicious activity gets flagged early

This phase is where banks and fintech platforms detect activities such as unusually large transfers, account misuse, or interactions with sanctioned entities.

The KYC framework is built on three core pillars, but those principles become meaningful only when translated into concrete, everyday tasks. To help compliance teams turn broad requirements into clear action, these pillars break down into eight practical components that shape effective KYC workflows.

Complete Know Your Customer checklist in 2026

Before you begin, it’s important to note KYC requirements vary by industry, jurisdiction, and regulatory body. The checklist below outlines the core steps most organizations follow, but it’s your responsibility to understand the specific legal standards that apply to your sector. Always review local regulations and consult your compliance team or legal counsel when needed.

Use this standardized KYC checklist to guide every stage of customer onboarding and compliance. Whether you’re in banking, fintech, real estate, or healthcare, these steps ensure accuracy, consistency, and regulatory alignment.

1. Customer identification

Customer identification establishes the customer’s identity by collecting and verifying essential personal or business information from reliable sources:

• Collect full legal name, date of birth, and address
• Capture government-issued ID or business registration documents
• Validate identity through databases, biometrics, or document verification tools
• Confirm beneficial ownership for businesses

2. Document collection

Document collection supports identity verification by gathering additional materials confirming legitimacy, address, and financial background:

• Government ID (passport, driver’s license, national ID)
• Proof of address (utility bill, rental agreement, bank statement)
• Business documents (articles of incorporation, operating agreements, tax IDs)
• Source of funds or income documentation (pay stubs, tax returns, bank statements)

3. Identity verification

Identity Verification ensures the information and documents provided are accurate and authentic:

• Cross-check ID details against trusted sources
• Perform biometric checks (liveness verification, facial match)
• Use digital identity verification platforms when available
• Validate business identity using public registries or third-party databases

4. AML screening

AML screening helps identify customers who may be connected to financial crime or other illicit activity:

• Screen against AML, sanctions, and law enforcement databases (OFAC, UN sanctions lists, national crime registries, etc.)
• Conduct adverse media checks to identify past fraud, money laundering allegations, regulatory actions, or reputational risks
• Assess customer background and industry risk based on geography, business type, and exposure to high-risk activities

5. PEP screening

PEP screening focuses on identifying politically exposed persons and their associated risks:

• Determine whether the customer is a politically exposed person (PEP)
• Assess the level of political influence or exposure
• Flag connections to high-risk individuals or entities
• Apply Enhanced Due Diligence (EDD) where necessary

6. Risk assessment

Risk assessment consolidates KYC findings into a defensible risk classification that guides controls and monitoring:

• Assign low-, medium-, or high-risk categories based on CDD information
• Review geography risk, occupation risk, and transaction risk
• Document rationale for the risk rating
• Set monitoring frequency according to risk score

7. Signature collection

Signature collection captures formal consent required for identity checks, data processing, and regulatory compliance:

• Capture customer signatures (wet or digital) for regulatory consent
• Collect e-signature authorization for identity checks and data processing
• Store consent receipts for audit purposes
• Ensure signatures comply with industry standards (e.g., eIDAS, ESIGN, UETA)

8. Ongoing monitoring

Ongoing monitoring ensures continuous oversight throughout the customer relationship:

• Track transactions for unusual patterns
• Re-run AML and sanctions checks periodically
• Update customer profiles and documentation as needed
• Flag inconsistencies between expected and actual behavior

9. Record keeping

Record keeping supports audit readiness and regulatory compliance by securely storing documentation:

• Store verification records, documents, and monitoring logs securely, following best practices for data security and privacy compliance
• Maintain audit trails for regulatory review
• Follow jurisdiction-specific retention rules
• Use secure digital storage or compliant onboarding tools

How KYC varies across industries

KYC requirements aren’t one-size-fits-all. Different industries operate under different regulations, risk levels, and customer behaviors, so your checklist should adapt accordingly. Here are a few examples of how KYC varies across major sectors:

Banking and financial services

Banks and credit unions follow the strictest KYC and AML standards. Their checklists often include

• Beneficial ownership verification for business accounts
• Enhanced Due Diligence for high-value customers
• Frequent ongoing monitoring and transaction review
• More robust record-keeping requirements

Fintech and digital payments

Fintech companies balance regulatory obligations with a smooth digital onboarding experience. Their KYC procedures typically emphasize

• Automated identity verification tools
• Real-time AML and sanctions checks
• Digital document uploads and e-signatures
• Scalable workflows that handle large volumes of new users

Healthcare and insurance

Healthcare organizations must verify identities while complying with privacy regulations. Their KYC variations include

• Confirming patient or policyholder identity
• Verifying coverage, eligibility, and authorized representatives
• Secure, HIPAA-compliant storage of personal and medical information

Real estate and property management

Real estate firms and property managers use KYC to prevent fraud and ensure compliance with financial regulations. Their workflows usually involve

• Verifying buyer, seller, or tenant identity
• Checking funds sources for property purchases
• Reviewing business ownership for commercial tenants
• Documenting signatures for legally binding agreements

Adjusting for risk levels and regional regulations

Regardless of industry, KYC checklists shift depending on

• Customer risk category (low, medium, high)
• Jurisdiction or international region
• Local AML, privacy, and reporting laws
• The complexity of customer transactions

Organizations often create multiple KYC paths: one for standard customers, another for high-risk customers, and one for business entities.

Putting your KYC checklist into practice

A well-structured Know Your Customer checklist is more than a compliance exercise — it’s a safeguard against fraud, financial crime, and operational risk. By breaking KYC into clear steps (customer identification, due diligence, screening, and ongoing monitoring), you create a repeatable process protecting your organization and strengthening trust with every customer you onboard.

As regulations evolve and digital threats increase, clarity and consistency matter more than ever. Automated workflows and secure digital tools reduce manual work, improve accuracy, and keep your records audit-ready without slowing down the onboarding experience.

With the right structure and the proper tools, you meet compliance standards while creating a smoother, safer customer journey from the start.