An Overview of KYC Compliance Laws to Follow in 2023

In 2023, the anti-money laundering legislation and Know Your Customer (KYC) compliance laws are more important than ever. As businesses look ahead to the future, it’s essential for them to stay informed about the new laws and regulations that will help ensure their operations remain compliant. Here is a breakdown of some of the most important KYC compliance laws that companies should be aware of in 2023.

Federal Trade Commission Rules

The Federal Trade Commission (FTC) is responsible for enforcing consumer protection laws and regulating business practices. This agency has recently implemented several new rules that companies must adhere to when it comes to KYC compliance. These include requiring businesses to verify customer identity before providing services or products, as well as ensuring customers are given clear explanations of their legal rights and obligations when they enter into contracts with a company. Additionally, businesses must provide customers with information regarding any fees associated with their services or products, as well as a way for customers to opt out of receiving emails or other communications from the company.

The Dodd-Frank Wall Street Reform Act

The Dodd-Frank Wall Street Reform Act, which was signed into law in 2010, includes provisions aimed at improving financial market transparency and stability. One such provision requires financial institutions to have effective KYC policies in place that allow them to identify and monitor customers who may be engaged in money laundering activities or financing terrorism. In order for these policies to be effective, businesses must have procedures in place for verifying customer identity, monitoring customer activity on an ongoing basis, and filing suspicious activity reports when deemed appropriate.


The USA PATRIOT Act was passed shortly after 9/11 and is designed to combat terrorist financing by strengthening anti-money laundering laws and increasing financial transparency. Among other things, this law requires all financial institutions—including banks—to adopt KYC policies designed to prevent money laundering activities from occurring through their accounts. Banks must also establish customer identification programs (CIPs), which require customers to provide identification documents prior to opening an account or engaging in certain transactions. Additionally, banks must keep records of all customer transactions for at least five years so they can be audited if necessary.


One of the most important KYC compliance laws is the Anti-Money Laundering/Counter Terrorism Financing (AML/CTF) Act 2006. This law requires businesses to collect personal data from their customers in order to identify them and verify their identity. Additionally, companies must have procedures in place that allow them to monitor customer activity and report any suspicious transactions to the appropriate authorities. The AML/CTF Act also requires companies to keep records of customer information for a minimum of five years after a transaction has been completed.

The Corporate Transparency Act of the USA

To guarantee that the financial sector is safeguarded against money laundering and other deceptive practices, Congress passed the Corporate Transparency Act (CTA) in January 2021 as part of the AML Act of 2020. This law was designed to support any country’s mission to fight such crimes. In September 2022, FinCEN developed the “Beneficial Ownership Information (BOI) Reporting Requirements” which provides a method for instituting more stringent measures and confronting illegal activities within this field. All domestic and international corporations are mandated to share their BOI data with this authority. The “Final Rule” will be in effect starting January 1, 2024. However, companies created before this effective date must submit their BOI report prior to January 1st 2025 at the latest.

GDPR Regulations

Another important KYC compliance law is the General Data Protection Regulation (GDPR). The GDPR was introduced in 2018 and it applies to any company that processes personal data of EU citizens, regardless of where the company is located in the world. Under this law, companies must obtain consent from their customers before processing personal data and must ensure that this data is kept secure at all times. Additionally, companies must delete personal data upon request by their customers or when it is no longer needed for its intended purpose.

Guidelines and Best Practices for 2023

As regulations continue to evolve, it is critical for businesses and organizations to remain well-informed and up-to-date with the latest developments in order to stay compliant. To assist in this process, professionals can use it as a guide when preparing for any upcoming changes that may impact their operations. By understanding these policies and guidelines, businesses can confidently ensure they are operating within legal parameters while still striving towards success.  Here are a few guidelines and best practices for 2023:

  1. Develop and implement a comprehensive data privacy policy that meets the requirements of applicable laws, including the General Data Protection Regulation (GDPR).
  2. Ensure software systems comply with all relevant security protocols and regularly review for potential vulnerabilities.
  3. Educate employees on cyber security best practices such as using strong passwords, avoiding phishing scams, and reporting suspicious activity.
  4. Regularly update systems to the latest version of software and security patches when available to reduce potential risks.
  5. Use two factor authentication for all employees accessing company data remotely or from devices that are not company-provided such as personal computers or mobile phones.
  6. Create a plan for responding to data breaches and use incident response teams, if need be.
  7. Utilize secure cloud-based storage solutions and encrypt all sensitive information that is sent or stored digitally.
  8. Monitor data usage and access rights to ensure only those with permission have access to the data they need.
  9. Implement an ongoing employee training program to ensure all employees understand and follow the company’s data security and privacy policies.
  10. Create a culture of compliance by involving stakeholders from all levels of the organization in policy development, implementation, evaluation, and enforcement.


KYC compliance laws protect both businesses and consumers alike by ensuring that only legitimate transactions take place between them. It is essential for businesses to understand these laws so they can implement proper procedures within their organization’s processes. Additionally, understanding KYC compliance laws will help ensure customer trust since they know that their personal information is being handled properly and securely. With more stringent regulations coming into effect, now is a great time to get familiarized with these laws!

At Global Legal Law Firm, our lawyers are familiar with the rapidly changing nature of electronic payments processing processors, and the ever changing regulations involved, with decades of expertise in ISOs, commercial collections, credit card brands, and other forms of electronic payment processing litigation. Let us guide you through this new and volatile environment, rather than attempting to navigate it on your own.

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