“Know your merchants” (KYM) is a term used in the context of “know your business” (KYB) practices, which refers to the process of verifying the identity and legitimacy of a business or individual with whom a financial institution is conducting business.
KYM specifically involves conducting due diligence on merchants, which typically includes verifying their identity, assessing their business activities and operations, and ensuring that they are not involved in any illegal or high-risk activities. This is an important step in mitigating the risk of conducting business with merchants who may be involved in activities such as money laundering or financing of terrorism.
By conducting KYM, financial institutions can ensure that they are not inadvertently supporting such activities and can take appropriate action if any risks are identified.
This page was last updated on January 2, 2023.