KYC stands for Know Your Customer
Direct Debit Scheme rules state that the service users who want to collect Paperless Direct Debits must verify the identity of the payer and his address, prior to the origination of any Direct Debits. It is recommended that this is achieved by using historical data from its records or for new customers by using a selection of registers e.g. electoral roll, post code list or credit rating list, which are available from Local Councils, the Royal Mail or other suppliers.
A list of verification measures to assist in verifying the payer’s details is available from
In addition to the ID checks listed by Bacs there are many others that are not listed which should be capable of giving an ID Check, if you do a web search on ID checking, or KYC checking you should find a few more.
The purpose of carrying out this ID check is to prevent fraudulent transactions being set up to obtain goods and services using someone else’s identity and bank details. Whilst the risk to the general public is very low, thanks to the Direct Debit Guarantee, the risk of fraud is entirely with the Service User.
At the time of writing Direct Debit is still relatively low and most other payment methods carry a considerably higher risk. It is reported that this is on the increase and an appropriate level of KYC check is all important in protecting your organisation.
What constitutes an acceptable level of KYC checking?
This is a difficult question to answer and ultimately it will be up to you and your sponsoring bank to agree what they believe is the right level of checking for you. If your organisation sells high value goods such as mobile phones or is involved in financial services then you would be expected to have a thorough process in place. If you are a charity or not for profit then the level of risk to you is considerably lower. Regardless of whether you believe you are likely to be a target of fraud you still must have some level of check in place if you collect via the Paperless Direct Debit scheme and it is highly recommended for AUDDIS users.
© Clear Academy Ltd 2011, Clear Academy is a trading name of Cleara Consulting Ltd. company registration number 07081560
Know Your Customer (KYC checking) and Direct Debit Fraud