What are KYC and KYB?

In today’s rapidly evolving digital economy, online marketplaces and crowdfunding platforms have become essential in facilitating transactions between buyers and sellers, as well as connecting investors with innovative projects. These platforms act as intermediaries in financial transactions, making them subject to strict regulatory requirements designed to ensure security, transparency, and trust.

To comply with financial regulations and mitigate risks related to fraud, money laundering, and terrorist financing, these platforms must implement Know Your Customer (KYC) and Know Your Business (KYB) procedures. These verification processes, mandated by regulatory bodies such as the ACPR, help prevent illicit activities while ensuring that identity authentication remains highly supervised, sophisticated, and efficient.

Understanding and implementing KYC and KYB requirements is crucial for digital platforms, as non-compliance can result in legal consequences, fines, and reputational damage. 

AML checks: what you need to know about KYC and KYB

What is the meaning of KYC (Know Your Customer)?

KYC or Know Your Customer is a mandatory verification process designed to authenticate the identity of individuals involved in financial transactions. It is a crucial element in anti-money laundering (AML) regulations, aiming to ensure that platforms only engage with legitimate clients. KYC checks typically involve collecting personal information such as full name, date of birth, nationality, residential address, and contact details.

By enforcing KYC protocols, platforms can minimize fraud risks and foster a secure financial environment. The process of validating customer identity helps establish trust, ensuring that only verified individuals can participate in transactions. KYC compliance is a requirement for all financial service providers, including online marketplaces, payment service providers (PSPs), and crowdfunding platforms.

What is the meaning of KYB (Know Your Business)?

Know Your Business (KYB) is the business-specific counterpart to KYC, focused on verifying the legitimacy of companies or legal entities. While KYC addresses individual clients, KYB checks involves a deeper dive into the company’s operations, ownership, and structure to verify their authenticity and adherence to legal regulations.

KYB process requires the collection of corporate documents like the company’s trade registration (KBIS), articles of association, and proof of ownership. This additional scrutiny ensures that businesses comply with anti-money laundering (AML) regulations, identify the ultimate beneficial owners, and assess potential risks tied to corporate activities. KYB compliance is especially important for crowdfunding platforms, where both the business and individual participants must undergo rigorous checks.

KYC vs KYB: key differences

While both KYC and KYB serve the overarching goal of financial security, the significant difference between KYC and KYB is in their scope and complexity. KYC primarily focuses on verifying individual clients and can typically be completed within hours using personal identification documents. In contrast, KYB involves a more extensive examination of corporate structures, ownership details, and risk assessments, often requiring several days to complete.

KYB also includes screening against sanctions lists, checking for adverse media coverage, and conducting deeper financial risk assessments. Given these differences, financial institutions and digital platforms must tailor their compliance approach based on the type of entity they are dealing with—whether individual consumers or corporate clients.

Lemonway’s automated verification system streamlines both KYC and KYB processes, significantly reducing verification time while maintaining rigorous security standards.

Relevance to marketplaces and crowdfunding platforms

What is the purpose of KYC/KYB compliance for these platforms

Online marketplaces and crowdfunding platforms act as financial intermediaries, facilitating payments between buyers and sellers or investors and project leaders. Because of their role in financial transactions, they are subject to strict regulatory oversight and must implement robust due diligence procedures.

Depending on their operational model, these platforms may need to be directly approved by the ACPR or operate under the license of a Payment Service Provider (PSP). Regardless of their structure, adherence to KYC and KYB regulations is a legal requirement, and non-compliance can result in severe financial penalties, criminal charges, or even operational bans.

For online marketplaces, KYC verification is mandatory for all sellers to prevent fraudulent activity. Crowdfunding platforms must apply KYC procedures to all involved parties—including investors, lenders, donors, and project creators—before validating payment accounts.

By implementing robust KYC and KYB checks, platforms not only ensure legal compliance but also build trust and credibility among their users. By using a PSP such as Lemonway, you get the benefit of support from a team of experts who take care of this verification procedure for you.  

KYC and KYB procedures: required information and documents for online verification

What information is required for a new customer when undergoing AML process?

WWhen creating a payment account, various pieces of information will be required from the account holder: their first name, last name, date of birth, nationality, country of residence and email address. But to finalise the authentication of the account, several documents must be collected.

Requirements for individuals (KYC verification) 

• One of the following principal identification documents:
  • ID card
  • Passport
  • Residence permit
• One of the following secondary identification documents:
  • Driving licence
  • Health Insurance card
  • Family record book
  • Marriage certificate
  • Birth certificate
  • Taxation notice less than one year old

Requirements for legal entities (KYB verification)

In addition to an identity document of the legal representative of the company and that of all shareholders holding 25% or more of the company's shares, a series of company specific documents must be collected:

• KBIS (trade registry document) of the company less than 3 months old
• Articles of Association dated and signed by the company's legal representative
• Document stating the company share allocation
• Company RIB (banking information document)

Also, ORIAS registration document or equivalent from your company's country of registration in the following cases: 

• IOBSP (intermediary in banking and payment services) for marketplaces; 
• IFP (Crowdfunding Intermediate) for Crowdfunding Donation/Reward platforms and Crowdfunding Loan platforms; and 
• CIP (Crowdfunding Investment Advisor) for Crowdfunding Equity platforms.   

How Lemonway helps verify and simplify KYC and KYB compliance

Ensuring compliance with these requirements may seem complex for marketplaces and crowdfunding platforms. However, working with a PSP like Lemonway simplifies the KYC and KYB process by automating verification steps, reducing manual effort, and improving compliance efficiency with AML regulations.

By leveraging advanced verification solutions, platforms can enhance user trust, minimize fraud risks, and accelerate onboarding—ensuring a seamless experience for both individuals and businesses. Find out why the KYC has never been so easy & fast with Lemonway!