Compliance is the foundation of sustainable payment infrastructure. In crypto and cross-border payments, four acronyms come up over and over: KYC, KYB, AML, and KYT. Each addresses a different question, and together they form the backbone of how a business demonstrates that its payment flows aren't being used to move illicit funds.
KYC — Know Your Customer
KYC is the process of identifying and verifying an individual customer or counterparty. It typically includes collecting a government ID, verifying it against the person presenting it (often with a selfie or liveness check), and capturing additional information like address and source of funds.
KYC happens at onboarding and is periodically refreshed. The intensity of KYC scales with risk: a low-value retail customer gets a lighter check; a high-value institutional client gets enhanced due diligence (EDD).
KYB — Know Your Business
KYB is KYC for legal entities. It involves verifying the legal existence of the business, identifying the ultimate beneficial owners (UBOs), checking the directors and officers, and screening the entity against sanctions and adverse media lists.
KYB is more complex than KYC because of the layered ownership structures common in international business — beneficial ownership can be obscured through holding companies in multiple jurisdictions.
AML — Anti-Money Laundering
AML is the umbrella program that combines KYC, KYB, ongoing monitoring, sanctions screening, transaction monitoring, suspicious activity reporting, and policies/training to prevent money laundering and terrorist financing.
Regulated payment institutions are required to maintain an AML program proportionate to their risk profile, typically under the supervision of a Money Laundering Reporting Officer (MLRO).
KYT — Know Your Transaction
KYT is the crypto-native compliance control. Where KYC asks "who is this person," KYT asks "where did this crypto come from and where is it going." It uses blockchain analytics to trace the history of funds and flag exposure to high-risk wallets or services.
KYT is what lets a regulated business say with confidence that an incoming stablecoin payment did not originate from a sanctioned wallet or a mixing service.
Wallet screening and sanctions
Wallet screening is the practical application of KYT. Before accepting an incoming payment or releasing an outgoing one, the system checks the counterparty wallet against blockchain analytics databases (Chainalysis, Elliptic, TRM Labs are common providers). High-risk matches stop the transaction for review.
Sanctions screening checks parties against OFAC, EU, UK, UN, and local sanctions lists. This applies to both crypto and fiat — failing to screen is a serious regulatory breach.
What businesses are responsible for
Even if you use a regulated payment provider, you typically retain some responsibility — particularly for the contracts you enter and the counterparties you transact with. A good provider will give you tooling and evidence, but won't make your compliance obligations disappear.
Where AXON fits
AXON Transfer is designed to support compliance-aware routing including wallet screening and documented transaction evidence. AXON Pay is designed to incorporate KYC, KYB, and KYT checks at the orchestration layer. (Subject to applicable licensing and partner arrangements.)
AXON's services are subject to applicable licensing and partner arrangements. Nothing on this page constitutes legal, regulatory, tax, or investment advice.
See AXON's compliance-aware design
AXON Transfer is designed to keep compliance evidence tied to every transaction.
See AXON TransferFrequently asked questions
Is crypto regulated?
Yes, in most major jurisdictions, though specifics vary. The UAE has VARA; the EU has MiCA; the US has a patchwork of federal and state regulation.
What's the difference between KYC and KYT?
KYC verifies the identity of a counterparty. KYT analyzes the transactions themselves, including the history of the funds being moved.
Do I need to screen every transaction?
Most regulated businesses screen every transaction against sanctions and run risk scoring on the counterparty.
What if my counterparty fails screening?
Depending on the failure type and jurisdiction, you may need to block the transaction, file a suspicious activity report, or take other steps. Consult counsel.