KYC (know your customer)

Know your customer rules come from anti-money-laundering law. Regulated financial firms must verify who their clients are, understand where their money comes from and monitor for suspicious activity. In the EU these obligations stem from the Anti-Money Laundering Directives; in the UK from the Money Laundering Regulations.

What brokers usually ask for

• Proof of identity: passport, national ID card or driving licence.
• Proof of address: a recent utility bill or bank statement.
• Source of funds or wealth: sometimes payslips, bank statements or other evidence, especially for larger deposits.
• Payment method checks: confirming a card or bank account is in your name.

Separately, EU and UK brokers must run an appropriateness assessment under investor protection rules, asking about your knowledge and experience of leveraged products. That is not KYC in the strict sense, but it often happens in the same sign-up flow.

Worked example

You open an account and deposit 500 euros by card. The broker lets you trade but asks for ID and a proof of address within a set period. Later you deposit 40,000 euros; the broker asks for a bank statement showing where the money came from. Withdrawals are usually sent back to the original payment method in your name.

Practical notes

• Complete verification before you need to withdraw. Delays usually happen when documents are missing.
• A broker that asks for no checks at all is a warning sign: regulated firms are not allowed to skip them.
• Never send documents to someone who contacted you unprompted. See forex scam red flags and how to check a broker licence.