How much does KYC cost businesses across the world, and how can you tell if the cost is justified? KYC compliance is a non negotiable to avoid both financial crime and hefty penalties. However, costs can escalate quickly if these checks are carried out manually. Additionally, some providers don’t offer transparent pricing, meaning that firms face unexpected costs outside of their standard packages. This guide will show you how to keep your KYC costs from escalating too quickly while maintaining accuracy and compliance.
What is KYC?
KYC consists of a range of checks and processes that verify customer identity and perform necessary customer due diligence to prevent financial institutions from onboarding clients that may pose a risk to the organisation, such as money laundering. Identity verification is a critical part of the onboarding process, and ongoing monitoring after onboarding is also critical to monitoring evolving risks of financial crime.
Several regulators, both nationally and internationally, set out regulatory standards regarding KYC. Document verification and continuous monitoring are a must, as well as increased due diligence depending on a risk assessment. Customer data should be taken during the customer onboarding process, which with an advanced platform like ComplyCube should only take under a minute for a full KYC check.
KYC has remained a critical component in safeguarding financial systems.
KYC requirements have largely evolved over the past few years. Forbes states, “the evolution of KYC from its regulatory roots to its contemporary digital prowess reflects a dynamic response to the evolving landscape of financial transactions. From the manual processes of the early days to the technological innovations of today, KYC has remained a critical component in safeguarding financial systems.”
Why Manual KYC Checks Are Expensive:
Manual KYC checks can be expensive. These costs can accumulate due to labor-intensive processes, as skilled compliance staff must manually review documents, assess risk, and enter data into systems. On top of this, there are also operational expenses related to secure data storage, software tools, and ongoing staff training. Additionally, manual checks come with the risk of human error, which can lead to costly fines and customer dissatisfaction if something is missed.
Labor Costs: Skilled compliance staff are expensive, and manual reviews take time.
Document Handling: Verifying IDs and other documents manually is slow, error-prone, and less effective at spotting fraud.
Data Entry: Manual input increases errors and requires more oversight.
Compliance Risk: Regulatory updates, audit needs, and potential fines demand thorough (and costly) processes.
Poor Scalability: Manual checks don’t scale well with growth, causing bottlenecks.
Customer Friction: Slow onboarding and rework can drive customers away.
Infrastructure Needs: Secure systems for storing and accessing data add to costs.
How Much Does KYC Cost?
Understanding the cost of Know Your Customer (KYC) compliance starts with knowing the key checks involved in the process. Each step in the KYC journey can have an associated cost — especially if outsourced or done at scale. Here’s a breakdown of the core KYC checks and their typical price ranges:
Document Check
Document verification includes document authentication, data extraction, cross-referencing and image verification. These processes ensure that the right security features, such as watermarks, holograms, and other markers, are authentic and that information can be cross-referenced with other data sources. Document checks can include passport verification, diver’s license verification, and many other forms of documentation, including social security cards, tax documents or employment records. ComplyCube charges $0.80 per stand-alone document check in their basic plan, meanwhile competitor Sumsub’s document check starts at $1.35 per verification. Find more information on ComplyCube’s document checks here.
Biometric Check
The user submits a selfie or live video as part of the identity verification process. The facial recognition software compares the live image to the image on the submitted document (e.g., passport or driver’s license). The software looks for specific facial features, such as the distance between eyes, nose shape, and overall facial structure, ensuring that the person in the document matches the one in the selfie. ComplyCube charges $0.20 for a liveness and facial similarity check (photo). Find more information on all of ComplyCube’s biometric checks here.
Pricing Factors To Consider
Verification Depth
- Standard KYC: Typically, this check includes document and biometric verification.
- Enhanced Due Diligence (EDD): Includes increased Customer Due Diligence than a standard KYC check, with added checks such as adverse media screening.
- Ongoing Monitoring: Real-time alerts and monitoring for changes in customer risk profiles, new adverse media, etc.
Volume-Based Pricing
- Bulk discounts: Lower per-check cost for higher monthly or annual volumes.
- Tiered pricing: Pricing levels that change once certain volume thresholds are hit.
- Commitment levels: Discounts for committing to a minimum monthly or annual volume.
Geographic Scope
- Domestic vs. international checks: International verifications often cost more due to data access costs and regulatory complexity.
- High-risk jurisdictions: Enhanced checks in sanctioned or high-risk countries may incur premium fees.
Hidden Costs to Watch Out For
- Set-up fees: This is a common cost that you might find with some AML & KYC platforms, which can amount to £20,000 in some cases.
- Support fees: Some platforms will charge for ongoing support, which quickly becomes very expensive for businesses. Ensuring that support is included within your package is critical.
- Data retention and report downloads: Another hidden cost to be weary of is the ability to download data and reports without paying an additional fee.
Ask potential providers the tough questions before it’s too late.
Harry Varatharasan, Chief Product Officer at ComplyCube states, “A lot of providers may seem to have cost-effective pricing models, yet then their standard packages do not include essential features, such as report downloads or support fees. This then leaves customers vulnerable to constantly paying extra fees to obtain the service that was actually required. Ask potential providers the tough questions before it’s too late.”
For information on the costs of an AML check, read “AML Check Cost: Hidden Fees in Compliance.”
What Does Non Compliance Look Like?
For many financial institutions, especially corporate and institutional banks, the cost of incorporating cutting-edge KYC technology may seem steep. While compliance costs that include services such as identity verification with liveness detection and customer due diligence to ongoing monitoring, these are nothing in comparison to the regulatory fines, reputational harm, and lost business that result from non-compliance.
Furthermore, research by Gartner shows that by 2026, 30% of organizations will view their existing authentication or digital ID systems as insufficient for combating deepfake threats. This underlines the importance of ensuring strong KYC processes to identify fraudulent identities.
The Real Cost of Neglecting KYC Compliance
Failing to invest properly in KYC compliance is not just risky, it’s expensive. Regulatory bodies around the world are issuing record-breaking fines for lapses in KYC processes, especially those involving financial crime, money laundering, terrorist financing, or failure to identify beneficial owners. A single violation can result in:
- Fines running into the millions: Major banks and other financial institutions have been penalized upwards of $100 million for inadequate customer identification programs and poor ongoing monitoring.
- Increased compliance scrutiny: Once flagged, institutions often face more frequent audits, KYC reviews, and must implement expensive remediation plans under tight deadlines.
- Business disruption: Weak KYC systems can lead to the suspension of licenses, loss of banking partnerships, and denied access to international markets, particularly when operating in high-risk jurisdictions.
- Reputational damage: Non-compliance erodes customer trust and harms your brand, often causing long-term revenue losses beyond immediate penalties.
Fortify Your Operations with Expert KYC
KYC can not only fortify your operations, but increase customer trust, and ensure compliance with national and international regulations. For more information on how to integrate cutting-edge KYC solutions, get in touch with one of our compliance experts.
