Know your client (KYC) is the everyday name for FINTRAC’s client identification duty: verifying, using one of five approved methods, that the person or entity you are representing on a purchase or sale is who they say they are before the deal proceeds — a duty every reader of this glossary carries by the nature of the job.
FINTRAC Guideline 11 explains the methods that can be used to verify the identity of a person or an entity: for an individual, government-issued photo identification, the credit file method, the dual-process method, the affiliate method, or the reliance method; for an entity, confirmation of existence, reliance, or (for specified low-risk entities only) a simplified method. Each is a distinct, complete way to satisfy the duty on its own — you are not required to layer several together for the same client.
Remote verification is explicitly allowed, which matters for a business that runs half its client relationships over text and video. You must have a process in place to authenticate the government-issued photo identification document, and the guidance names facial-recognition comparison of a “selfie” against the ID photo, or a live video call comparing the person’s face and the ID’s name to the document, as acceptable approaches. The authenticity check and the identity-matching step do not need to happen at the same moment — a two-step flow, document capture followed by a later liveness check, is fine.
KYC answers a narrower question than it sounds like it should: is this specific person who they claim to be. It does not, on its own, tell you who controls a corporate client behind them — that is the separate beneficial ownership duty, triggered only once your client is an entity rather than an individual.
A buyer client emails a photo of their driver’s licence and a selfie instead of meeting in person. Using the dual-process approach, you compare the selfie to the licence photo, then follow up with a short video call to confirm the same face matches the same name on the document — exactly the two-step remote flow the guideline allows, satisfying the identity-verification duty without ever meeting the client in your office.
See also: beneficial ownership, politically exposed person and your compliance regime.
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