Fergal Parkinson
Published on: May 11, 2022
The meaning of KYC is “Know Your Customer”. It’s the process of a business verifying the identity of its customers. KYC is most often used in financial services and has been around since 1882.
In this article, we’ll discuss what the main industry tools are, how they work, and why they’re important for the future of fintech. We’ll also look at how mobile number and mobile device intelligence can strengthen the verification process for financial institutions.
In today’s increasingly global, digital economy, financial institutions are extremely susceptible to illegal criminal activities. KYC verification standards are therefore crucial. They protect banks from fraud, corruption, money laundering, and terrorism financing.
KYC compliance is part of the onboarding process and focuses on two core stages:
The term KYC verification describes the process of confirming and verifying the identity of a customer. In order for financial institutions to do business with a customer, they must have a robust KYC verification process in place.
While mobile device verification strengthens digital onboarding, it is important to recognise that Know Your Customer is not simply an identity confirmation exercise. KYC operates as a broader risk assessment framework within financial services.
Financial institutions are required to evaluate customer risk profiles based on multiple factors including geography, transaction behaviour, product usage and potential exposure to financial crime. Identity verification is the foundation, but risk categorisation determines the level of due diligence required.
Mobile device intelligence enhances this framework by providing contextual risk indicators at the point of onboarding. Device tenure, SIM history and behavioural consistency can inform whether a customer should be classified as standard risk or subject to enhanced due diligence. Positioning mobile verification within this broader risk model ensures it supports regulatory obligations beyond simple document checks.
From a customer’s perspective, the process is simple. They provide the bank with some form of identification, usually a driving licence or passport. The bank verifies the information against their internal records. If all the information matches, the customer becomes verified and can conduct business with the bank. If there are any discrepancies, the customer must go through additional verification procedures until the bank is satisfied that they are who they say they are.
KYC procedures are not entirely effective on their own. Criminals have discovered methods to circumvent them by creating false identities or corporate shells. They can also use the internet to hide their activities and make it difficult for banks to trace them.
The dark web is used by criminals to buy and sell fraudulent, and often stolen, identities that can be used to establish bank accounts and launder money. KYC systems, while invaluable in the fight against financial crime, are not flawless. Banks and fintech firms must keep up with criminals by continually improving their methods and technologies.
Banks have been under increasing pressure from government regulators to improve their KYC procedures. Biometric identification is one such innovation, employing unique physical characteristics such as fingerprints or facial features to authenticate a person’s identity.
Other techniques such as mobile number verification are being used to enhance KYC procedures. Big data analytics helps banks detect trends in customer behaviour and predict fraud, while machine learning analyses historical data to identify patterns that can increasingly predict future fraud.
Money laundering exposes financial institutions to some of the most severe penalties in regulated finance. Fines, licence restrictions and lasting reputational damage are all on the table when controls fail. Anti-money laundering, or AML, is the framework designed to prevent that exposure.
AML refers to the set of laws, regulations and internal procedures that financial institutions must follow to detect, prevent and report attempts to disguise the proceeds of crime as legitimate funds. Where KYC confirms who a customer is, AML governs the wider obligation to monitor how that customer behaves and to act when activity looks suspicious.
KYC is best understood as one pillar within an AML programme rather than a standalone requirement. A complete AML framework for a financial institution typically includes:
In the UK, AML obligations sit under the Money Laundering Regulations and are overseen by the Financial Conduct Authority (FCA), while institutions operating internationally must also align with the standards set by the Financial Action Task Force (FATF). These frameworks share a common expectation: controls should be proportionate to the risk each customer and transaction presents.
Mobile number and device intelligence support AML compliance at several points across this framework. At onboarding, signals such as number ownership, SIM tenure and device consistency help institutions assess risk before an account is opened. Through the customer lifecycle, the same signals feed ongoing monitoring, flagging SIM swaps or device changes that can indicate account takeover or attempts to obscure identity.
There are many different ways of completing a KYC verification process, but most organisations use a combination of methods. The most common are:
The following steps are usually involved:
Banks and financial institutions used to perform KYC checks in person and make physical photocopies of passports or other forms of ID. These days, the checks are usually done online and via mobile devices. However, some banks still require customers to provide physical copies of their documents as a final verification step after digital checks have been completed.
Mobile number verification is also commonly used as an additional verification step. The customer provides their mobile phone number and the organisation verifies it against their internal records. Businesses like ours support that process by allowing companies to link the number and the individual together, and to verify that the given number is currently in the possession of the person they believe it to be.
Mobile number verification and mobile device intelligence are two methods that fintech companies can use to confirm their customers’ identities.
Once a customer provides a mobile number, our database can provide a trust risk score giving an overview of how trustworthy the provided details are. As part of those checks, our database verifies that the number is associated with the information provided, has not been involved in fraudulent activity, is connected to the expected mobile carrier, and more.
Taking this one step further, we can also use mobile device intelligence to match the mobile device to the number. There has been a significant rise in SIM swap fraud and account takeover fraud, so being able to match the number to the device provides a strong signal as to whether a transaction is genuine.
KYC is not finished after the onboarding stage. It is a never-ending process: a fintech firm must continue to monitor their clients’ risk and fraud levels throughout the business relationship. Know Your Customer is therefore an essential, perpetual component of fintech security and compliance.
Regulatory frameworks require financial institutions to perform ongoing monitoring of customer activity to identify suspicious behaviour over time. This includes:
Mobile device verification can extend beyond onboarding into lifecycle monitoring. Persistent device intelligence allows institutions to identify changes in device usage patterns, SIM swaps or inconsistencies that may indicate fraud or identity compromise. Embedding mobile signals into continuous monitoring strategies strengthens both fraud prevention and regulatory compliance.
Mobile device verification is the process of using a mobile device to confirm a user’s identity. This method is becoming more popular because it is convenient and easy to use.
Using our Verify solution, we are able to provide insights into the authenticity of the device being used for the KYC process — for example, whether the name and address of the customer match the records associated with the number provided.
In some cases, mobile devices are also used to check the security of an account using two-step authentication, which adds an extra layer of security. Two-factor authentication (2FA) adds an extra barrier to entry in addition to passwords.
Like mobile device verification, it uses mobile devices but instead of scanning an ID, users are prompted to enter a one-time code sent to their phone. When a customer registers for a new account, the fintech company will usually ask them to provide their phone number, which can then be used for verification purposes. We’re experts in this type of KYC and can support your business in implementing it securely.
Enhanced Know Your Customer (KYC), also known as Enhanced Due Diligence (EDD), is an advanced process that financial institutions implement to manage higher-risk customers more effectively. While standard KYC procedures involve basic identity verification and risk assessment, EDD requires a more thorough examination of a customer’s profile to mitigate potential risks associated with financial crimes such as money laundering and terrorism financing.
EDD procedures typically include:
Implementing EDD allows financial institutions to gain a deeper understanding of their high-risk customers, thereby enhancing their ability to prevent illicit activities and comply with regulatory standards.
Verifying an individual is only part of the compliance picture. When a financial institution onboards a company, it has to be confident that the business is legitimate, that it is trading lawfully and that the people behind it are who they claim to be. This is the role of Know Your Business.
KYB is the process of verifying the identity, ownership and legitimacy of a corporate customer rather than an individual. It confirms that a business is genuine, that it is properly registered and that the institution understands who ultimately owns and controls it. A KYB check typically covers:
Where KYC verifies an individual customer, KYB applies the same scrutiny to a corporate entity, then extends it to the people who own and direct that business. The two work in tandem. You can read a fuller comparison in our guide to KYC and KYB.
Mobile intelligence has a part to play here too. Verifying the phone numbers and devices linked to directors, beneficial owners and authorised representatives adds a real-world layer to corporate checks, helping institutions confirm that the people behind a business are contactable, consistent and not associated with prior fraudulent activity.
Banks employ various methods to verify customers’ phone numbers as part of their KYC processes:
This is the first and most basic level of KYC. The fintech firm begins by asking for basic information such as name, address and date of birth. This data is then verified using databases with identification data and criminal records. Individual customers may also be asked to describe their occupation and the purpose of their account.
This is the second level of KYC and includes more detailed verification procedures. CDD requires a financial institution to take a closer look at their customers and assess the associated risks, including measures to prevent money laundering and terrorist financing. Firms must collect more detailed information including occupation and source of income, and must scrutinise all financial transactions.
This is the third level of KYC and applies to lower-risk customers or situations where the risk of money laundering or terrorist financing is assessed as low. It allows firms to apply a reduced level of verification proportionate to the risk presented.
This is the fourth and most comprehensive level of KYC, reserved for high-risk customers or transactions. EDD includes the most detailed verification procedures, requiring firms to collect extensive information about the customer’s personal and business relationships and to scrutinise all financial transactions closely. Depending on the type of fintech product or service a business offers, certain customers or transaction types may automatically trigger an obligation to perform Enhanced Due Diligence.
Weak KYC processes expose financial institutions to multiple risks:
As fraud becomes more sophisticated, static identity checks are increasingly insufficient. Criminals exploit stolen documents, synthetic identities and compromised credentials. Mobile device intelligence reduces these vulnerabilities by introducing dynamic, real-world signals that are significantly harder to fabricate, strengthening resilience against identity-based fraud while reinforcing regulatory confidence in the institution’s control environment.
For financial institutions operating across multiple jurisdictions, KYC requirements are not uniform. Regulatory expectations vary by region, particularly in relation to data handling, identity verification standards and reporting obligations.
A flexible verification framework is therefore essential. Mobile device intelligence can be deployed in a risk-based manner, adjusting friction levels depending on jurisdictional requirements and customer risk profiles. This adaptability supports compliance across diverse regulatory environments without creating unnecessary onboarding friction.
Interested in learning more about leveraging mobile phone numbers for verification and KYC purposes? Contact us about how we could help your business remain compliant.
Last updated on June 23, 2026
We provide the most comprehensive device, network and mobile numbering data available
Contact us > Chat to an expert >
