Alpaca's Broker API Guide to the KYC Process
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đź’ˇGain valuable insights into the process from its requirements to implementation
Frequently Asked Questions
(FAQs)
What is KYC?
By law, “Know Your Customer” or “Know Your Client” (KYC) is a standard in the investment industry that ensures investment firms know detailed information about their clients' identities, risk tolerance, investment knowledge, and financial position. KYC protects both clients and firms.
How does the KYC process work?
US laws and regulations are designed to ensure financial institutions have well-developed AML programs and KYC procedures due to the high risk and occurrence of financial crimes. Having a strong Customer Identification Program (CIP) and thorough watchlist screening procedures are two important components to complying with laws and regulations designed to prevent money laundering, terrorism financing, fraud, identity theft, and other crimes.
There are two different methods to conduct identity verification: documentary or non-documentary. To give context, the former refers to comparing customer information against government-issued photo IDs, while the latter compiles data points (name, date of birth, address, phone number, tax identification number) and verifies this information against various databases that vary from region to region.
For more detailed information on this process, sign up and read our complimentary guide.
There are two different methods to conduct identity verification: documentary or non-documentary. To give context, the former refers to comparing customer information against government-issued photo IDs, while the latter compiles data points (name, date of birth, address, phone number, tax identification number) and verifies this information against various databases that vary from region to region.
For more detailed information on this process, sign up and read our complimentary guide.
What is the difference between CIP and KYC?
Know Your Customer (KYC) and Customer Identification Program (CIP) are both essential for business operations. KYC involves knowing a customer’s identity and the financial activities they engage in. On the other hand, the Customer Identification Program (CIP) involves verifying the information provided by a customer.
Who can conduct KYC?
You are eligible and have the option to conduct KYC on your own if you meet the following requirements:
- If you are a regulated entity such as an Investment Advisor or Broker-Dealer and registered in your local jurisdiction.
- If you do not meet the above requirements, Alpaca will assume resume responsibility for all aspects of the KYC process. In addition, Alpaca may still conduct KYC activities above and beyond your program as it deems appropriate.
- If you will be owning the KYC procedures, you will meet with our business services team to discuss and approve the KYC product, provider, software, and databases you plan to use as well as your onboarding flow procedures.
Does Alpaca offer a KYC API?
We offer KYC as a Service option for partners to successfully onboard customers and conduct verification. For documentary and non-documentary verification, we use renowned, vetted, and qualified providers. With Alpaca’s Events API, you can receive status updates on the verification process. For more detailed information on our offering, sign up and read our complimentary guide.
Alpaca's Broker API Guide to the KYC Process
For fintech apps, during onboarding, KYC is a crucial regulatory requirement to collect and confirm the identity of their customers. Thankfully, with our developer-centric API, you can build this process easily. In this guide, we cover various aspects of the KYC process, such as its definition, onboarding flow requirements, benefits, and eligibility. Lastly, we'll examine the difference between Alpaca conducting KYC for you vs. doing it yourself.
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Frequently Asked Questions
(FAQs)
What is KYC?
By law, “Know Your Customer” or “Know Your Client” (KYC) is a standard in the investment industry that ensures investment firms know detailed information about their clients' identities, risk tolerance, investment knowledge, and financial position. KYC protects both clients and firms.
How does the KYC process work?
US laws and regulations are designed to ensure financial institutions have well-developed AML programs and KYC procedures due to the high risk and occurrence of financial crimes. Having a strong Customer Identification Program (CIP) and thorough watchlist screening procedures are two important components to complying with laws and regulations designed to prevent money laundering, terrorism financing, fraud, identity theft, and other crimes.
There are two different methods to conduct identity verification: documentary or non-documentary. To give context, the former refers to comparing customer information against government-issued photo IDs, while the latter compiles data points (name, date of birth, address, phone number, tax identification number) and verifies this information against various databases that vary from region to region.
For more detailed information on this process, sign up and read our complimentary guide.
There are two different methods to conduct identity verification: documentary or non-documentary. To give context, the former refers to comparing customer information against government-issued photo IDs, while the latter compiles data points (name, date of birth, address, phone number, tax identification number) and verifies this information against various databases that vary from region to region.
For more detailed information on this process, sign up and read our complimentary guide.
What is the difference between CIP and KYC?
Know Your Customer (KYC) and Customer Identification Program (CIP) are both essential for business operations. KYC involves knowing a customer’s identity and the financial activities they engage in. On the other hand, the Customer Identification Program (CIP) involves verifying the information provided by a customer.
Who can conduct KYC?
You are eligible and have the option to conduct KYC on your own if you meet the following requirements:
- If you are a regulated entity such as an Investment Advisor or Broker-Dealer and registered in your local jurisdiction.
- If you do not meet the above requirements, Alpaca will assume resume responsibility for all aspects of the KYC process. In addition, Alpaca may still conduct KYC activities above and beyond your program as it deems appropriate.
- If you will be owning the KYC procedures, you will meet with our business services team to discuss and approve the KYC product, provider, software, and databases you plan to use as well as your onboarding flow procedures.
Does Alpaca offer a KYC API?
We offer KYC as a Service option for partners to successfully onboard customers and conduct verification. For documentary and non-documentary verification, we use renowned, vetted, and qualified providers. With Alpaca’s Events API, you can receive status updates on the verification process. For more detailed information on our offering, sign up and read our complimentary guide.