KYC (Know Your Customer) is the process by which companies learn and verify the identity, address, and income of their customers. It involves collecting and analysing customers’ documents such as identity cards, utility bills, and tax statements.
Certain types of companies are obligated to implement KYC; however, performing KYC verifications has its downsides. It requires the allocation of a significant amount of resources by the company, and many customers are averse to sharing personal information.
Many companies around the world, including online marketplaces, retailers, and online casinos have realised this and have decided to forgo KYC, and are now reaping the rewards of this approach.
For example, no KYC casinos are very popular among players since they ensure players’ anonymity and allow them to start playing straight away, without a tedious, lengthy sign-up process.
Why KYC Practices Don’t Suit Every Business Model?
Types of Companies for Which KYC is Mandatory in the UK
Before you decide which path your company will take, you need to know which enterprises are obligated to integrate KYC processes. Below is a list of company types for which establishing KYC practices is mandatory according to UK regulations:
- Banks and other financial institutions, including investment firms, payment processors, insurance providers, and credit unions
- Real estate firms and agents
- Cryptocurrency exchanges and wallet providers
- High-value goods dealers
- Legal and professional services such as lawyers and accountants
- Casinos
- Extended sectors, which include management consultants, insolvency practitioners, auditors, and tax advisors
The value of all these entities implementing KYC is debatable, but the fact is that, under current UK regulations, they are required to do so.
Benefits of No KYC
If your company does not fall within a category listed above, you are most likely better off taking the no KYC route, which benefits both the company directly and its customers.
Lower Costs for the Company
Startups often operate on a tight budget. During its early stages, a company’s cash flow can be both low and unpredictable. Customer payments can be late, overhead costs high, and cash reserves have not yet been accumulated. On top of this, startups might not be familiar with the seasonal fluctuations of profit, making it harder to plan spending.
For these reasons, wise startup leaders implement various strategies to prevent needless losses, such as setting clear spending guidelines, establishing a savings schedule, and even finding clever ways to inexpensively furnish offices.
Introducing the cost of KYC checks could break a company that might be making just enough to cover operational costs. KYC costs encompass the labour of manually analysing documents, data entry, and the cost of safe data storage.
Privacy
Many customers greatly value their privacy and introducing KYC measures could drive them away. Storing large amounts of personal data in one place can lead to a data breach, creating severe issues for the company and its customers alike.
The company might lose a huge amount of money in a settlement payment. Customers on the other hand can become victims of identity theft. This is a serious problem which can lead to debt, damage to the person’s credit rating, and even arrest.
Some customers are reluctant to share personal data because they dislike having their activities monitored. While companies might do this to improve their products or services, certain customers will still be driven off.
Lastly, some customers seek out no KYC businesses due to geographic limitations on access to certain services.
Convenience
Potential customers can easily change their mind about a purchase if they come across a cumbersome registration process, or some other type of inconvenience, as indicated by the online shopping cart abandonment rate in 2025 having been 70.19%.
People live fast-paced lives and often cannot be bothered by lengthy sign-ups to services, and KYC makes signing up particularly slow and inconvenient, with customers having to scan multiple documents to hand them in.
Furthermore, once a customer has handed in the necessary documents they have to wait for their verification, which can last up to a few days in some cases. This slow process is not only costly for the company, as has been talked about earlier, but also deters potential customers.
Appeal to Digital Nomads
The digital nomad lifestyle is becoming increasingly popular, with the number of digital nomads estimated to be between 40 and 80 million in 2025. The lifestyle involves travelling freely, sometimes through multiple countries, and working remotely using the internet.
This group of people do not have a permanent residence and sometimes find it hard to pass KYC checks due to a lack of utility bills or a mail address. If a company considers digital nomads a part of its target audience it should likely forego setting up KYC checks.
Conclusion
Some companies cannot avoid implementing KYC as it is required of them by the law. Others, however, have a choice, and should probably omit KYC as it slows down operation, increases costs, and puts off many customers.
