Know your customer (KYC)
The obligation for banks and payment companies to know who the customer is, where the money comes from and what it is for.
It is the practical end of anti-money-laundering law, where the FATF has set the international tone since 1989 and the EU has issued directives since 1991. Customer due diligence means verifying identity, finding the beneficial owner behind companies, screening against sanctions lists, flagging politically exposed persons, and then checking that the account still behaves the way the customer said it would.
For fintechs, KYC is often the most expensive part of the product. Every onboarding step loses customers, and every step removed risks a fine. A whole industry has grown up around digital identity: NFC passport reads, selfie matching and national e-IDs. The customer sees a form; the bank sees the only thing standing between it and a regulator.