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

DocumentPurposeNotes
Valid PassportIdentity verificationGovernment-issued, not expired
Proof of AddressAddress verificationUtility bill or bank statement (dated within 90 days)
EIN Confirmation LetterBusiness verificationCP 575 or 147c from IRS
Articles of OrganizationBusiness registration proofState-issued document

Additional Requirements by Provider

ProviderExtra Requirements
StripeUS IP address, functional website, privacy policy
PayPalUS IP strongly recommended, no RA address restrictions
MercuryUS address (can be home country), US phone number
RelayBusiness description, expected transaction volume

The SSN/ITIN Problem

Traditional KYC processes rely on:

  1. Social Security Number (SSN) for US persons
  2. Credit bureau checks
  3. 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?

TermDefinitionScope
KYCIdentity verification processIndividual customer onboarding
AMLAnti-Money LaunderingBroader compliance framework
CDDCustomer Due DiligenceOngoing monitoring of customer activity
EDDEnhanced Due DiligenceExtra scrutiny for high-risk customers

Common KYC Failure Reasons

  1. Mismatched information: Name or address doesn’t match across documents
  2. Expired documents: Passport or proof of address is outdated
  3. Virtual mailbox addresses: Banks reject RA, P.O. Box, and virtual office addresses
  4. Restricted-country IPs: Connecting from OFAC countries triggers additional review
  5. Insufficient business documentation: Missing EIN letter or Articles of Organization
  • 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