KYC in crowdfunding: who really validates it and what happens during run-off management?
What is KYC?
KYC, which stands for Know Your Customer, refers to the set of procedures used to identify, verify and understand the clients of a financial service.
Often reduced to a simple identity document check, KYC is in reality a much broader process. It does not merely consist of verifying that a user is who they claim to be, but also of assessing their profile, their risk level and the nature of their relationship with the service they are using.
This framework falls within strict regulatory requirements, particularly in relation to anti-money laundering and counter-terrorist financing (AML/CFT). It constitutes the essential first step in detecting suspicious behaviour and securing financial flows.
With the strengthening of regulatory requirements in recent years, KYC has become a continuous process. Financial actors must not only verify their clients at the point of onboarding, but also ensure over time that information remains up to date and consistent.
Today, KYC is therefore simultaneously a regulatory obligation, a risk management tool and a foundation of trust. It is essential to the proper functioning of any financial ecosystem, from banks to crowdfunding platforms.
Who actually validates KYC?
Contrary to a common misconception, KYC validation is not the direct responsibility of the crowdfunding platform.
In practice, this responsibility falls to the payment service provider (PSP) the platform works with. Providers such as Lemonway or MangoPay are responsible for opening users' e-wallets, verifying their identity and ensuring their compliance with regulatory requirements.
It is these authorised and supervised institutions that bear responsibility for the KYC process and, more broadly, for AML/CFT obligations.
The platform, for its part, acts as an interface: it collects information, structures the user journey and facilitates the transmission of documents. But it does not validate the applications itself.
This distinction is essential to understanding how crowdfunding works. As soon as funds pass through a payment service provider, it is the latter that becomes the guarantor of account and transaction compliance.
In other words, KYC is not simply a feature built into a platform: it is a regulatory mechanism carried by the payment infrastructure on which the platform relies.
What happens to KYC during run-off management?
When a platform ceases its activity and a run-off management arrangement is put in place, the question of KYC becomes central.
Investors have already been identified, their accounts are active and financial flows must continue to circulate. Must verifications then start from scratch? Are existing files still valid?
The answer depends on one key factor: the payment environment in use.
When the payment service provider is maintained, existing accounts and their associated KYC files are largely preserved. Users remain identified within the same regulatory framework, which allows operations to continue without a complete restart of verifications.
In this case, only occasional updates may be necessary — for example, if a document has expired or if certain information needs to be supplemented.
Conversely, when the payment provider changes, KYC files must be reassessed by the new provider. Existing information can be reused, but its validation depends on the new provider's requirements. If files are complete and compliant, the transition is fast. Otherwise, users are asked to provide updates.
In all cases, the objective remains the same: ensuring regulatory compliance while maintaining the continuity of flows, without creating unnecessary complexity for investors.
Run-off management does not therefore call KYC into question as such, but requires adaptation to the payment infrastructure in place.
The Run Off approach
In a run-off management context, KYC management must not become a bottleneck for investors.
Run Off's approach is based first on a simple principle: prioritise continuity wherever possible. When the original platform's payment service provider can be maintained, the goal is to preserve the existing environment to avoid any unnecessary restart of verifications.
This approach preserves accounts, bank details and user credentials, while maintaining already validated KYC files. Operations can thus continue without disruption, with minimal friction.
When this is not possible, an audit of existing files is carried out to identify any potential issues. Previously collected information is reused as far as possible, and only strictly necessary updates are requested.
In all cases, the user journeys provided are designed to be clear and accessible, notably through the direct integration of payment provider journeys within the Run Off platform. Users can thus complete any necessary updates within a single environment, without having to navigate multiple interfaces or procedures.
The objective remains constant: ensuring regulatory compliance while guaranteeing a smooth experience for investors.
Conclusion
KYC is often perceived as an administrative constraint, or even as a point of friction in the user journey. In reality, it is a structuring element in the operation of financial platforms, guaranteeing the security of flows and regulatory compliance.
In a run-off management context, this challenge becomes even more sensitive. It is not simply a matter of verifying identities, but of maintaining an existing system, with already active users and ongoing operations.
The challenge is therefore not to redo KYC, but to know how to preserve it, adapt it and, where necessary, update it in a targeted manner.
This is precisely the logic behind the Run Off approach: ensuring the continuity of operations while limiting unnecessary restarts, in order to reconcile regulatory requirements and simplicity for investors.
