Perpetual KYC: The future of customer due diligence

Perpetual KYC (pKYC) is one of the best ways to protect customers. Learn what it is, what it looks like, and why it's important.

Icons of a persona loading bar
Last updated:
Read time:
Share this post
Table of contents
⚡ Key takeaways

As more business happens online than ever before, companies need to find new ways to reduce fraud and increase security without sacrificing customer relationships.

A new method is quickly emerging as one of the best ways to protect your customers: perpetual KYC.

What is perpetual KYC?

KYC stands for Know Your Customer, which refers to regulations that require you to verify potential and current customers’ identities so you understand who you’re interacting with.

With traditional KYC methods, companies typically verify users at the beginning of a relationship, such as when they’re creating a new account, and at set times afterward — for example, reverifying annually.

Perpetual KYC (pKYC) takes this further by introducing ongoing customer due diligence: reverifying customers on a continuous basis and putting strategies in place to flag worrisome interactions. By consistently monitoring the relationship, you can be more confident each transaction comes from the same verified person.

The concept of perpetual KYC began in the finance industry when banks recognized the need to move beyond basic verification in order to protect their customers. Today, it can be used by any company that wants to increase security and improve customer relationships.

What does perpetual KYC look like?

Perpetual KYC looks different for every business depending on its unique needs, goals, and customers. But the basics are the same for everyone: continuous monitoring of each individual customer.

Some companies choose to reverify identity at the start of every interaction. Others use progressive risk segmentation to analyze the risks of any given transaction and make verification decisions accordingly: for example, requiring reverification for a high-value purchase or an age-restricted product.

You can also set up triggers to notify you of any changes that warrant investigating — for example, if a customer shows suspicious or unusual behavior, is added to a watchlist, or conducts a transaction from a location known for high levels of identity theft. This is a proactive approach that allows you to respond to a dangerous scenario quickly, rather than react after a problem has already happened.

Free white paper
See how experts evaluate KYC solutions

Why is perpetual KYC important?

1. Identity is a relationship, not a one-off transaction

Identity verification is no longer just about knowing that a person is who they say they are upon signup — it’s about bringing a person’s offline persona to the online world and identifying who they truly are behind the screen every time they access the account.

Perpetual KYC’s continuous monitoring protects your business AND your customers. It proves a person is who they say they are — not just whether they should have access.

2. Increase security and reduce fraud

Traditional KYC practices could allow a high-risk situation to go unnoticed for months or even years until the next reverification comes around. How much damage could a bad actor do in that time?

With the triggers and ongoing customer due diligence built into perpetual KYC, you’ll be able to identify and take action against fraudulent users and transactions much sooner.

3. Improve customer relationships

47% of Americans experienced financial identity theft in 2020. Ease your customers’ minds by providing a robust identity verification process that protects their accounts. By reverifying users before they can create a new password, change contact information, or make a large transaction, you’ll reduce the risk of account takeovers and show customers you’re committed to protecting their information.

Your customers understand the need for identity verification, but they don’t have the patience for clunky or inefficient processes. Traditional KYC methods often require users to repeatedly submit the same information — causing frustration, conversion drop-offs, and more manual processes for employees.

Perpetual KYC can make reverification faster and easier since information is collected behind the scenes and stored in the user’s account. For example, after you’ve verified an individual’s driver’s license and selfie during onboarding, you could allow them to reverify their identity simply by having them take a new selfie and ensuring it matches the one on record.

4. Compliance and regulations

If all the inherent benefits of perpetual KYC aren’t convincing enough, implementing it may be required for your business. For example, if you’re a financial company, you’re required to conduct ongoing customer due diligence as a key part of AML (anti-money laundering) regulations. Failure to comply can result in serious consequences, including fines, criminal proceedings, and sanctions.

The FinCEN Files are an example of this in action: in September 2020, many global banks got in trouble for continuing to work with certain accounts despite having evidence of money laundering. While the banks had some KYC measures in place, they didn’t take action until too late and incurred billions of dollars in fines and dramatic drops in share value.

Power perpetual KYC with Persona

While KYC is incredibly important, incorrect implementation makes it a burden for both your team and your customers. A tool like Persona makes the process streamlined and efficient.

Our trusted identity infrastructure, which offers one of the industry’s widest ranges of verification components, is completely customizable for your business. Build the perpetual KYC workflow that makes sense for you, and modify the friction for each individual and transaction to find the perfect balance between user experience and fraud prevention.

With built-in reverification through Persona Accounts and continuous reports to help enrich your understanding of users, continuous monitoring has never been easier.

Protect your customers and your business with perpetual KYC powered by Persona. Find out how we can help.

Published on:

Frequently asked questions

No items found.

Continue reading

Continue reading

Minimizing referral fraud while growing your online marketplace
Minimizing referral fraud while growing your online marketplace

Minimizing referral fraud while growing your online marketplace

Learn about common referral fraud schemes and how they can impact your marketplace. Discover strategies for protecting your buyers, sellers, and business.

From fraud to fairness: Leveraging KYC and age verification for online gaming
From fraud to fairness: Leveraging KYC and age verification for online gaming

From fraud to fairness: Leveraging KYC and age verification for online gaming

KYC can help keep online gamers of all ages safe and reduce fraud. Learn how KYC and age verification can benefit your gaming platform.

How to fight ID fraud in a world of generative AI
How to fight ID fraud in a world of generative AI

How to fight ID fraud in a world of generative AI

Learn how generative AI is changing the game when it comes to fake IDs and what you should be mindful of when enhancing your fraud strategy.

What is reverification, and why does it matter?

What is reverification, and why does it matter?

Establish trust with your users by implementing reverification at key touchpoints.

Let your users Verify, and Reverify, and Reverify again.

Let your users Verify, and Reverify, and Reverify again.

Reverification of individuals in Persona, enabled by Accounts.

What is eKYC?

What is eKYC?

Take a look at the different signals that eKYC can take advantage of and review the benefits that eKYC offers both businesses and their customers.

Ready to get started?

Get in touch or start exploring Persona today.