The core AML and KYC concepts, explained
Definitions written for real estate professionals in Spain and Portugal — what each term means, what the law requires, and what a defensible file looks like in practice. For step-by-step implementation, see the AML Knowledge Centre.
What is KYC?
KYC — Know Your Customer — is the process of identifying a client, verifying that identity against reliable documents or data, understanding who ultimately owns and controls them, and assessing the risk they present before entering a business relationship. In real estate it applies to buyers, sellers and their beneficial owners, and must be documented and retained.
What is AML?
AML — anti-money laundering — is the framework of laws, controls and procedures that obliged businesses must apply to prevent criminal proceeds from entering the legitimate economy. For real estate it means a documented risk assessment, customer due diligence, screening, source-of-funds checks, staff training, recordkeeping and reporting suspicious activity to the financial intelligence unit.
AML vs KYC: what is the difference?
AML is the entire regulatory regime a firm must operate — risk assessment, policies, training, screening, reporting and recordkeeping. KYC is one part of that regime: identifying and verifying the client and understanding their risk. Put simply, KYC is something you do to a client; AML is something your business must be.
What is KYC verification?
KYC verification is the step that confirms a client is who they claim to be, using reliable and independent evidence — a valid identity document checked for authenticity, or a qualified electronic identification. For remote clients it normally combines document authentication with a biometric liveness check that binds the person to the document.
What is client onboarding in real estate?
Client onboarding is the structured process of taking a new buyer or seller from first contact to an approved, documented client file. In real estate it combines commercial steps with regulatory ones: identification, verification, beneficial ownership, screening, risk classification, source of funds, and a recorded approval decision before the transaction proceeds.
What is buyer verification?
Buyer verification is the due-diligence process applied to the purchasing side of a property transaction: confirming the buyer's identity, their tax identification and residency status, who is actually behind a corporate purchaser, how the purchase is funded, and whether the buyer or their funds trigger any sanctions, PEP or adverse-media concern.
What is seller verification?
Seller verification is the due-diligence process applied to the disposing side of a property transaction: confirming the seller's identity, that they are the legal owner or properly authorised to sell, who ultimately controls a corporate seller, and screening them against sanctions, PEP and adverse-media data before the sale proceeds.
What is source of funds?
Source of funds is the specific origin of the money being used in a transaction — the actual account and the activity that generated it. It differs from source of wealth, which explains how the client's overall assets were accumulated. For property purchases, source of funds must be evidenced, not merely stated by the client.
What is customer due diligence (CDD)?
Customer due diligence (CDD) is the set of measures an obliged subject must apply to know and risk-assess a client: identify and verify the client, identify beneficial owners, understand the purpose and intended nature of the relationship, and monitor it on an ongoing basis. It has three intensities — simplified, standard and enhanced.
What is enhanced due diligence (EDD)?
Enhanced due diligence (EDD) is the intensified set of measures applied when a client, product, channel or country presents higher money-laundering risk. It typically adds deeper source-of-funds and source-of-wealth verification, adverse-media and open-source research, senior management approval, and more frequent ongoing monitoring.
What is a politically exposed person (PEP)?
A politically exposed person (PEP) is an individual who holds or has held a prominent public function — such as a head of state, minister, senior judge, senior military officer, ambassador, or director of a state-owned enterprise. Their immediate family members and known close associates are treated equivalently. PEP status is a risk indicator, not an accusation.
What is sanctions screening?
Sanctions screening is the process of checking clients, beneficial owners and counterparties against official sanctions and watchlists to ensure no prohibited person or entity is involved. Unlike most AML measures, sanctions compliance is absolute: there is no risk-based tolerance and no threshold below which a designated person may be dealt with.
AML & KYC glossary
Short definitions of 30 recurring terms — SEPBLAC, Ley 10/2010, UBO, titularidad real, adverse media and more.
Open the glossaryOne client — one KYC/CDD
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