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.
Written by Andréas Hobbelin · Last updated
What KYC actually covers
KYC is often used loosely to mean 'collecting an ID copy'. In regulated practice it is a sequence of distinct steps, each of which must be evidenced:
- Identification — establishing who the client claims to be (name, date of birth, nationality, tax ID, address).
- Verification — confirming that claim against an independent, reliable source such as a passport or DNI/NIE check.
- Beneficial ownership — identifying the natural persons who ultimately own or control a company, trust or fund.
- Purpose and nature — understanding why the client is entering the transaction and what the funds are for.
- Risk assessment — scoring the client and transaction so the level of due diligence matches the risk.
- Ongoing monitoring — keeping the profile current for the life of the relationship.
Who has to do KYC in real estate
In Spain, real estate agents and intermediaries are obliged subjects (sujetos obligados) under Ley 10/2010 and Real Decreto 304/2014. Lawyers, notaries, property developers and mortgage intermediaries carry their own separate obligations. In Portugal the equivalent framework is Lei 83/2017.
A crucial point that is regularly misunderstood: the fact that a lawyer, a notary or a bank later performs its own checks does not remove the agent's obligation. Each obliged subject is independently liable for its own file.
What a compliant KYC file looks like
Supervisors do not assess intent — they assess documentation. A defensible file contains the identity evidence, the beneficial-ownership structure, the screening results with the decision taken on any match, the source-of-funds evidence proportional to the risk, the risk classification and its rationale, and a timestamped record of who did what and when.
Why KYC is repeated so often in a property transaction
In a typical Spanish transaction the same buyer is asked for the same documents by the agent, the lawyer, the developer, the mortgage broker, the notary and the bank. Each party rebuilds the same file in isolation. That is the structural inefficiency PropComply addresses: one client, one structured KYC/CDD file, securely shared with the parties that need it — while each party keeps its own independent decision and liability.
Frequently asked questions
Is KYC the same as AML?
No. KYC is one component of an AML programme. AML is the overall regime — risk assessment, policies, training, reporting and recordkeeping — while KYC is the client-facing identification and due diligence part of it.
When must KYC be completed?
Before the business relationship is established or the transaction is executed. In practice, waiting until reservation or notary stage is a common source of delay and of supervisory findings.
How long must KYC records be kept?
Under Ley 10/2010 obliged subjects must retain documentation for ten years. Records must be retrievable and legible for that period.
Sources and further reading
Put this into practice
PropComply structures KYC/CDD once per client and shares it securely with the parties in the transaction — each keeping their own independent decision.
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