KYC: Know Your Customer Definition
What is KYC? Learn how Know Your Customer verification works for non-US founders opening US bank accounts and Stripe accounts without an SSN.
Definition
KYC (Know Your Customer) is a mandatory identity verification process that financial institutions and payment processors use to:
- Confirm customer identity
- Detect and prevent fraud
- Comply with anti-money laundering (AML) laws
- Assess customer risk levels
KYC Requirements for Non-US Founders
Standard Documents Required
| Document | Purpose | Notes |
|---|---|---|
| Valid Passport | Identity verification | Government-issued, not expired |
| Proof of Address | Address verification | Utility bill or bank statement (dated within 90 days) |
| EIN Confirmation Letter | Business verification | CP 575 or 147c from IRS |
| Articles of Organization | Business registration proof | State-issued document |
Additional Requirements by Provider
| Provider | Extra Requirements |
|---|---|
| Stripe | US IP address, functional website, privacy policy |
| PayPal | US IP strongly recommended, no RA address restrictions |
| Mercury | US address (can be home country), US phone number |
| Relay | Business description, expected transaction volume |
The SSN/ITIN Problem
Traditional KYC processes rely on:
- Social Security Number (SSN) for US persons
- Credit bureau checks
- US-based identity databases
Non-US founders without SSN face challenges:
- Cannot pass standard credit bureau checks
- ITIN may help but is not universally accepted
- Alternative verification (passport + proof of address) may require more documentation
June 2025 CIP Exemption: Relief for Non-US Founders
In June 2025, the OCC, FDIC, and NCUA introduced a Customer Identification Program (CIP) exemption allowing banks to verify identity using approved third-party digital systems without requiring SSN/ITIN.
This means:
- EIN + valid passport = sufficient for Mercury, Relay, and similar banks
- Payment processors like Stripe accept passport + proof of address for non-US founders
KYC vs AML: What’s the Difference?
| Term | Definition | Scope |
|---|---|---|
| KYC | Identity verification process | Individual customer onboarding |
| AML | Anti-Money Laundering | Broader compliance framework |
| CDD | Customer Due Diligence | Ongoing monitoring of customer activity |
| EDD | Enhanced Due Diligence | Extra scrutiny for high-risk customers |
Common KYC Failure Reasons
- Mismatched information: Name or address doesn’t match across documents
- Expired documents: Passport or proof of address is outdated
- Virtual mailbox addresses: Banks reject RA, P.O. Box, and virtual office addresses
- Restricted-country IPs: Connecting from OFAC countries triggers additional review
- Insufficient business documentation: Missing EIN letter or Articles of Organization
Related Terms
- EIN: Business tax identification number required for identity verification.
- Mercury: Startup-focused US bank with remote onboarding for non-residents.
- FinCEN: US Treasury bureau that sets identity verification standards.
This is a dictionary entry. For full banking guide, see Open US Business Bank Account Without ITIN