Knowledge base

KYC Compliance Software: A Step-by-Step Guide to Choosing Provider

David Grinberg
Director of FinTech at TechMagic. Ex-VP of Goldman Sachs. Blockchain and Web3 expert. Experienced engineering manager and CTO.
KYC Compliance Software: A Step-by-Step Guide to Choosing Provider

When businesses onboard users from different countries, they face multiple challenges, including detecting fraudsters and ensuring compliance. Many enterprises dealing with high volumes of data opt for automated Know Your Customer compliance software to streamline identity verification process.

However, understanding the compliance requirements of each country remains a significant hurdle. To address this challenge, some companies engage multiple KYC software providers for different regions, mitigating the risk of operational crashes in case a vendor encounters technical difficulties.

One effective measure fintech solutions can implement is Know Your Customer software verification. This process requires individuals to prove their identity by providing the necessary information. It ensures regulatory compliance, safeguards against fraudulent activities, and protects the integrity of its operations.

Therefore, selecting the best KYC compliance provider becomes crucial for businesses. From assessing business requirements and researching potential providers to evaluating user experience, support, cost, and return on investment, we will guide you through.

What is KYC Compliance Software?

KYC compliance is the process of customer identity verification, ensuring that individuals engaging with financial services are who they claim to be. With the shift toward online interactions, face-to-face verification has been minimized, making customer verification even more important to maintain trust and prevent fraudulent activities.

Why KYC software compliance is important?

KYC compliance software is like having a superhero shield for your business, protecting it from money laundering, fraud, and even funding for terrorist activities. You can detect and prevent illicit activities by verifying customer identities and thoroughly examining their information. Imagine a scenario where a bank uses KYC software to uncover multiple accounts opened with fake identities, signaling potential money laundering.

But it doesn't stop there. KYC compliance software also helps build trust with your customers. When customers see that you have stringent biometric authentication, business verification, identity verification compliance processes down, they feel more confident in sharing their personal information and conducting transactions.

Whether you're in banking, cryptocurrency, or other industries, adhering to KYC requirements is a legal obligation. Non-compliance can result in hefty fines, damage to your reputation, and even legal consequences.

KYC compliance software can

  • reduce manual effort, streamline data validation processes, and automate repetitive tasks
  • provide scalability and global expansion for businesses
  • ensure robust policies and procedures are in place to meet regulatory requirements (Anti-Money Laundering (AML), Counter Financing of Terrorism (CFT), and other compliance regulations)

Where KYC Compliance Is Used?

best kyc solutions where kyc compliance is used
  • Brokers and Investment Platforms: KYC procedures are essential for brokers and investment platforms to authenticate the identity of investors, comply with regulatory requirements, and prevent fraudulent activities.
  • Transport and Ride-Sharing Services: Identity verification is necessary for the transport and ride-sharing industry to ensure passenger safety and comply with local regulations.
  • Banking: KYC procedures are critical for opening bank accounts, granting loans, processing transactions, and ensuring compliance with regulatory requirements. Banks need to verify the identities of their customers to prevent fraudulent activities and maintain the integrity of the financial system.
  • Fintech companies often provide online platforms and services that involve monetary transactions, such as peer-to-peer lending, digital wallets, crowdfunding, and investment platforms.
  • Cryptocurrency: Cryptocurrency exchanges and platforms must implement robust KYC procedures to ensure compliance with anti-money laundering (AML) regulations and maintain the integrity of the digital asset ecosystem.

3 Steps of KYC Verification Process

kyc process

By identifying the counterparty and scrutinizing the source and recipients secure money transfers of funds, KYC procedures help determine the legitimacy of operations and fraud prevention, money laundering, and terrorist financing, thereby increasing the overall security of interactions between businesses, financial institutions and users.

The KYC verification data validation process typically involves three main stages:

kyc verification process
  1. Customer Identification Program: This stage involves collecting and verifying customer information, usually done during the registration process for banks, while other institutions may begin the procedure after registration.
  2. Customer Due Diligence: Additional background checks may be conducted to assess the risk associated with a customer. This step helps identify any past involvement in financial scams or investigations.
  3. Continuous Monitoring: Ongoing monitoring ensures that verification data remains current, enabling the system to analyze suspicious transactions closely. This process allows tracking large transactions to countries linked to terrorism, with potential account suspension and reporting to regulatory and law enforcement authorities.

Biometric verification methods such as face or fingerprint recognition are increasingly employed to secure digital identity, enhance security, and prevent identity fraud.

Top 7 KYC providers

Our FinTech director, David Grinberg, recommends a top KYC software provider - KYC-Chain, with advanced KYC solutions. We don’t want to limit you to one provider, and we picked 6 more to help you make more impactful and intelligent decisions.

Let’s keep going!


kyc-chain best kyc api

KYC-Chain is a blockchain-based best KYC software provider that offers a decentralized approach to identity verification. It allows businesses to manage customer verification efficiently and identifies advanced fraud attacks, leveraging fraud prevention and blockchain KYC and AML capabilities. KYC-Chain's bank-grade compliance toolkit can scan over 10,000+ data points from sources in 240 countries within 30 seconds.


onfido kyc provider

Onfido is a trusted identity verification company that uses AI and machine learning to analyze user documents and facial features. Focusing on simplifying identity verification, platform combines trusted data sources, biometric authentication and verifications, and fraud detection signals. It offers liveness verification, biometrics analysis, and automated application review, making it suitable for KYC and Anti-money laundering checks. Onfido's platform is used by top companies like Revolut, Remitly, and Bitstamp.


lemonway kyc provider

LemonWay is an experienced operator of a payment system for marketplaces, LemonWay has developed its own KYC software solution with supported identity document. It offers instant KYC for individual accounts and a conventional solution for corporate accounts. With the integration of LemonWay's payment system, businesses can uncover fraud patterns and enjoy seamless customer onboarding and KYC and AML verification without additional effort.

Shufti Pro

shufti pro kyc provider

Shufti Pro is one of the best KYC software provider offering services in over 200 countries. Focusing on financial services, peer-to-peer economy, gaming, crowdfunding, telecommunication, and travel industries, Shufti Pro allows comprehensive digital identify verification. Its solutions include identity verification, business authenticity verification, video interview KYC, and OCR for businesses. Shufti Pro utilizes AI technology and maintains a vast database to ensure effective KYC and AML (anti-money laundering) screening.


ondatokyc provider

Ondato offers a modular operating system for end-to-end KYC management and strong customer authentication and onboarding. With a single dashboard view, Ondato provides document verification and convenient customer onboarding, authenticating returning customers and managing customer data. The platform covers various compliance challenges, providing a central hub for KYC/AML compliance. Ondato's KYC software technology supports video ID verification, facial biometrics, e-signatures, NFC verification, and more. Trusted by companies like General Financing and Swedbank, Ondato offers a comprehensive KYC solution.


trulioo kyc provider

Trulioo is a global identity verification company with a vast database of 5 billion identities in 195 countries. Their KYC service offers ID document verification and AML compliance and watchlist checks, supporting over 11,800 document types. Trulioo's API integration allows for seamless integration into existing systems. The company also provides fraud prevention and business verification services, making it suitable for KYC and KYB checks.


veriff kyc providers

Veriff is an identity verification provider that integrates AI functionality into its products, offering advanced facial recognition and image capture technology. This identity verification platform creates a safe environment for consumers and businesses. Veriff provides reliable identity verification services, faster and more accurate results with its advanced AI and machine learning algorithms.


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How to Start Using KYC in Your Company

This is the point where we wanted to highlight the crucial moments in implementing the KYC solution.

Step 1: Assess Your Business Requirements

Every business has unique KYC requirements based on its industry, customer base, and risk profile. Consider factors such as the volume of customers you onboard, the level of due diligence required, and any specific regulatory obligations you must meet. Identify potential challenges you may face in implementing and maintaining a robust KYC process, such as resource constraints, technology limitations, or geographic considerations.

As your business grows, your customer base will expand, and the complexity of your compliance obligations may increase. Choose a KYC software solution that can scale alongside your business and accommodate future growth without compromising efficiency or compliance.

Ensure the KYC software provider's solution is compatible with your existing systems and infrastructure. Integration capabilities are crucial to streamlining your KYC processes and enabling data flow between systems. Assess the compatibility of the KYC software with your customer relationship management (CRM) system, document management platform, and other relevant applications. Seamless integration minimizes manual data entry, reduces errors, and enhances operational efficiency.

Step 2: Determine key features and functionalities

features of kyc software

When researching potential KYC software providers, it's important to determine the key features and functionalities that are essential for your business. Some of these features include:

Identity verification

Look for providers that offer robust identity verification solutions to ensure the authenticity of customer identities. This may include multiple enhanced methods, such as:

Biometric verification

Biometric verification tools enable businesses to verify their users' liveness and physical identity. Using technologies like facial recognition or fingerprint scanning, companies can ensure that the person accessing their services is who they claim to be. It uses unique data points physical characteristics like fingerprints or DNA profiling to identify individuals, reducing fraud detection and the risk of unauthorized access to user accounts.

Document verification

A key feature to look for is document verification. The software should be capable of determining the validity of IDs, and detecting fake or stolen documents. Different software solutions may have varying data sources and methods for verifying document information. For example, when a user uploads a photo of their passport, the software can verify if the provided information matches the data in the database.

Consider providers that offer document biometric authentication solution capabilities to verify the validity of identity documents such as passports, driver's licenses, and national ID cards. Look for features like Optical Character Recognition (OCR) technology, liveness detection, digital ID verification and face matching to enhance the accuracy of document verification.

Face verification

Automated face verification uses facial recognition algorithms to compare a person's live or recorded image with their ID document photo. This technology helps detect identity fraud by verifying the person's identity and ensuring they match the photo on their ID document.

Anti-Money Laundering verification

Many KYC compliance software solutions include AML compliance (anti-money laundering) features. These features help businesses check for Politically Exposed Persons (PEPs), monitor transactions exceeding specific thresholds, and identify potential money laundering activities.

This solution utilizes specialized software and databases to check if a customer appears on sanctions lists or is a Politically Exposed Person (PEP). These databases are often maintained by regulatory bodies and international organizations such as the United Nations, the European Union, and the US Treasury Department.

Risk assessment and monitoring

Seek providers that offer risk assessment tools to identify and assess potential customer risks. This may include screening against global watchlists, PEP (Politically Exposed Person) databases, and transaction monitoring to detect suspicious activities.

The KYC software should include risk profiling capabilities. It should screen customers against watchlists and global sanctions, perform risk assessments, and assign risk scores. This enables you to categorize customers and determine if enhanced due diligence is necessary.

Video recording

Video recording technology is used for manual checks in physical locations and online KYC processes. It is a deterrent to fraudsters as their face and real identity are recorded during verification. Video recording enhances security and reassures customers that the business is serious about maintaining high verification standards.


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Security & privacy

Protecting customer data is of utmost importance. To ensure data security and privacy, KYC compliance software should adhere to global rules and regulations, such as the General Data Protection Regulation (GDPR). By implementing robust security measures, businesses can maintain regulatory compliance and protect themselves from hefty penalties associated with data breaches.

Data residency

KYC compliance software addresses data breaches, account takeovers, and impersonation fraud. Some service providers offer the option of on-premises identity verification, enabling financial institutions to store customer data in-house. This approach provides enhanced security and control, minimizing the risk of data exposure.

Advanced automation capabilities

Leverage artificial intelligence and machine learning to automate identity verification processes, minimizing manual efforts, automating verification processes, and reducing the risk of human error. This enables financial institutions to perform KYC checks more efficiently and at scale.


Businesses should look for software that offers easy API integration, allowing them to access the services they need effortlessly. With a simple API call, businesses can verify customers and enhance their onboarding and customer experience further. On-premises integration is another valuable option, providing increased data integrity and customization.

Global Document Coverage

Ensure that the KYC compliance software offers extensive document coverage, allowing financial institutions to verify identity documents from various countries. This is crucial because different regions have unique laws, regulations, and document types. Look for a provider that supports various document types and demonstrates accuracy during the proof-of-concept stage

Step 3: Look for Potential KYC Software Providers

Selecting a reputable KYC software provider is crucial for the success of your compliance efforts. Here are some factors to consider when reviewing their reputation and track record:

  1. Consider providers that have experience working with businesses in your industry. They will better understand the specific compliance challenges and requirements you may face.
  2. Check if the provider holds industry certifications and has partnerships with reputable organizations. Certifications such as ISO 27001 for information security management or partnerships with industry associations can demonstrate their commitment to quality and compliance.
  3. Assess the provider's ability to scale their services as your business grows and ensure their software is reliable and secure. Look for uptime guarantees, data protection measures, and disaster recovery plans to mitigate risks and ensure uninterrupted service.
  4. Check if the KYC software provider holds certifications or accreditations from recognized bodies in the industry. For example, ISO/IEC 27001 certification demonstrates that the provider has implemented robust information security management systems. Similarly, certifications like SOC 2 or PCI DSS (Payment Card Industry Data Security Standard) indicate compliance with specific security standards.

A reliable KYC software provider should offer transparency and the ability to audit their processes. Inquire about their fraud prevention and data retention policies, audit trails, and the ability to generate compliance reports. Transparency ensures visibility into the actions taken during the KYC process and helps maintain an audit trail for regulatory purposes.

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Step 4: Evaluate User Experience and Support

When evaluating KYC software providers, it's essential to consider the user experience and customization options. Look for intuitive designs, clear instructions, and logical workflows that minimize the learning curve for your team. An intuitive interface ensures your staff can quickly pass the onboarding process to the software and perform their tasks efficiently.

Every business has unique processes and requirements for Know Your Customer compliance. Evaluate whether the software allows customization of workflows and the ability to define user roles and permissions.

Assess whether the KYC software integrate with current systems, such as CRM platforms, payment gateways, chargeback liability shift service or compliance management tools. Check if the software provider offers Application Programming Interfaces (APIs) and Software Development Kits (SDKs). APIs allow easy integration with other systems, enabling data exchange and automation between different platforms. SDKs provide developers with tools and resources to build custom integrations and extend the functionality of the KYC software.

Step 5: Consider Cost and Return on Investment

Determine how much time the KYC software will save compared to manual verification processes. Consider reduced, manual processes for data entry, streamlined workflows, and automated document verification. Estimate the time savings and calculate the value of the saved hours based on your business's hourly labor cost.

Instead, define the cost of non-compliance penalties and regulatory fines that could be avoided. Quantify the potential risk reduction and associated cost savings.

Assess the reduction in manual effort and associated KYC software cost. KYC software simplifies onboarding customers seamlessly, successful verification processes, eliminates errors, and minimizes the need for manual reviews and verifications.

Implement KYC Compliance Software with TechMagic

At TechMagic, we specialize in developing custom software solutions tailored to your specific needs, including Know Your Customer compliance software.

Providing FinTech app development services, we create a comprehensive KYC compliance software solution that streamlines your customer onboarding process, enhances risk assessment capabilities, and ensures regulatory compliance. Whether you require automated identity verification, document authentication, risk profiling, or ongoing monitoring, we have the skills and knowledge to deliver a robust and scalable solution.

In addition to software development, we provide ongoing support and maintenance services to ensure your KYC compliance software remains up-to-date and effective. We understand that regulatory requirements and industry standards evolve, and we are committed to keeping your software solution aligned with those changes.

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  1. What is KYC compliance?

    KYC compliance, or Know Your Customer Compliance, refers to verifying and identifying customers' identities to ensure they are not involved in illegal activities such as money laundering, fraud, or terrorist financing. KYC compliance involves collecting and verifying customer data, conducting risk assessments, and implementing measures to prevent financial crimes.

  2. What are the risks of non-compliance with KYC regulations?

    Non-compliance with KYC regulations can have serious consequences for businesses, especially financial institutions. Some risks include regulatory penalties, legal consequences, reputational damage, customer behavior, and increased risk exposure.

  3. What are the most important features when selecting a KYC software solution?

    When selecting a KYC software solution, consider identity verification, compliance management, user experience, integration capabilities, security and data privacy, and scalability.

  4. How can KYC software benefit my business beyond compliance?

    KYC software helps identify and prevent fraudulent activities by verifying customer identities, detecting suspicious patterns, and conducting risk assessments. Businesses can reduce the costs associated with manual verification, compliance management, and potential regulatory fines.

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Ross Kurhanskyi
Head of partner engagement