KYC (Know Your Customer)
KYC — Know Your Customer — is the set of regulatory procedures that require businesses to verify the identity of their customers, understand the nature of their activities, and assess the risk of money laundering or terrorist financing before and during a business relationship.
In the EU, KYC obligations for real estate companies are established under the Anti-Money Laundering Directives (currently AMLD5, with AMLD6 transposition expected by 2027). Property management companies, real estate agents, and investment platforms are classified as "obligated entities" — meaning they must perform KYC on clients, not as a best practice, but as a legal requirement enforced by national financial intelligence units like Spain's SEPBLAC.
KYC in real estate involves three core processes. Customer identification and verification (CIV) requires collecting official identity documents and confirming they are authentic. Beneficial ownership identification means determining who ultimately owns or controls a corporate client — the natural persons behind the company structure. Ongoing monitoring requires keeping customer information up to date and flagging suspicious transaction patterns.
The depth of KYC varies by risk. A standard residential tenant typically requires simplified due diligence (SDD) — basic identity verification and sanctions screening. An international investor contributing capital through a multi-layered corporate structure requires enhanced due diligence (EDD) — including verification of the source of funds, full beneficial ownership chain, and screening against international sanctions and politically exposed persons (PEP) lists.
For property companies, automating KYC through API-based identity verification, automated PEP and sanctions screening, and audit-ready reporting is now essential. Manual processes that worked at 50 properties break at 500.