Know Your Investor (KYI)

Know Your Investor (KYI) is an identity verification process, or a sub-measure of the standard Know Your Customer (KYC) verification process, focusing on verifying the personal information of investors before starting a business relationship with them. It involves various procedures designed to confirm the legitimacy of potential investors. KYI verification also works as a fraud prevention measure, helping regulated entities, such as fintech platforms, assess investors’ backgrounds and ensure they are genuine and not involved in any sort of fraudulent transactions, including crimes like money laundering. 

Like KYC, KYI is part of a bigger Anti-Money Laundering (AML) compliance framework. Major regulatory bodies require financial institutions to perform due diligence. KYI is a key component of these measures, designed to prevent money laundering and terrorism financing in the investment sector, which is particularly vulnerable to fraud. Essentially, KYI confirms that investors have the necessary market expertise to help the business scale and ensure long-term success while ensuring that accepting the investment is within the company’s risk appetite and in line with all regulatory compliance requirements.

Frequently asked questions

1

How Does the KYI Process Work?

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In general, the process flow looks something like this where investors:

  • Provide personal information, such as name, address, and contact information. 
  • Confirm their status and provide additional details about education, employment, partnerships, net worth, and total assets.
  • Submit proof of financial standing or asset details.
2

What is the Goal of the KYI Process?

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3

How Do You Classify Investors?

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4

What are the Criteria for a Qualified Investor?

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5

Who are Accredited Investors?

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What are the Three Key Elements of Know Your Investor (KYI) Compliance?

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What Solutions Can I Use for KYI in Practice?

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What is the FATF?

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