KYC Verification Process: What Happens After You Submit?
You have completed your KYC form, attached the requested documents and sent everything to us. What happens next? At Silva Hunt, the KYC verification process is both a legal compliance requirement and an important part of establishing a transparent business relationship. Where we act as an obliged entity under Estonia’s Money Laundering and Terrorist Financing Prevention Act, known as RahaPTS, we must apply the required AML/CFT due diligence measures before establishing the business relationship and continue relevant monitoring afterwards. This includes identifying the customer and beneficial owner, understanding the business relationship, checking PEP status and monitoring the relationship on an ongoing basis. Estonian Money Laundering and Terrorist Financing Prevention Act
Why is the KYC verification process important?
KYC means Know Your Customer. It helps us understand who our clients are, what kind of business they plan to operate and who is ultimately behind the company.
For you as a client, this process also has an important practical benefit. Good compliance from the beginning can make future business operations easier and more predictable.
A properly completed KYC process can help create a stronger foundation for:
- company administration;
- accounting and tax compliance;
- banking and payment relationships;
- future business expansion;
- changes in ownership or management;
- cooperation with international partners.
The goal is not simply to collect documents. It is to understand your business well enough to support it correctly.
What happens after you submit your KYC form?
Our legal team reviews your answers
The first step is a review of the information you provided. We check whether the answers are complete and whether the different parts of the questionnaire are consistent with each other.
Depending on the relationship and risk profile, the information reviewed can include:
- your identity and country of residence;
- the company’s planned activity;
- ownership and beneficial owners;
- countries where the business expects to operate;
- expected customers, partners and transaction patterns;
- the source of initial funding or other relevant funds.
The purpose is to understand the customer and ownership structure, to understand the expected business relationship, and to identify any risk factors that require additional attention. These are compliance objectives, not a commercial profiling exercise.
We verify information using reliable sources
The next part of the KYC verification process is verification. We may compare relevant details with official registers, reliable databases and other independent sources.
Country-risk information is one part of this review. We use authoritative sources such as the Financial Action Task Force and the European Union’s list of high-risk third countries. These two sources do not have identical legal consequences.
The FATF grey list identifies jurisdictions under increased monitoring. FATF expressly states that it does not call for automatic enhanced due diligence solely because a jurisdiction is on the grey list. Instead, FATF calls for a risk-based approach. FATF jurisdictions under increased monitoring
The EU high-risk-third-country list has a different role under Estonian law. Where the statutory conditions for a connection with a high-risk third country are met, RahaPTS requires enhanced due diligence, not only a general request for more context. EU high-risk third-country list
Free consultation
Join a service partner built for borderless entrepreneurs
Work with a team that combines company administration, advisory support, Estonia-specific know-how, partner introductions, community events, and mastermind access for internationally minded founders.
How country, PEP and sanctions risk affect the KYC verification process
A connection with a higher-risk country does not by itself prove that a client or transaction is problematic. We assess the circumstances and the complete risk profile. However, where the law requires enhanced due diligence, we must apply the additional measures prescribed by law.
For a statutory high-risk-third-country connection, those measures include:
- gathering additional information about the customer and beneficial owner
- the planned nature of the business relationship
- the origin of funds and wealth, and the reasons for planned or executed transactions.
The law also requires senior-management approval to establish or continue the business relationship and enhanced monitoring with additional or more frequent controls.
PEP screening is part of the required checks
PEP screening is not an optional check that we perform only when convenient. RahaPTS requires an obliged entity to gather information on whether the relevant person is a politically exposed person, a PEP’s family member or a known close associate. This means PEP screening forms part of the required due diligence process.
Where the customer or beneficial owner is a PEP, family member or known close associate, additional measures apply. These include senior-management approval, measures to establish the origin of wealth and the source of funds.
Sanctions screening is a separate regulatory obligation
Sanctions screening is also more than a general public-information check. Under Estonia’s International Sanctions Act, providers of accounting services and providers of trust and company services are among the persons with special obligations.
They must conduct sanctions-related due diligence when establishing and during a business relationship. Where a subject of financial sanctions or a prohibited transaction is identified, the applicable financial sanction must be implemented and the Financial Intelligence Unit must be informed where required by law. Estonian International Sanctions Act
For clients, this means that sanctions screening, PEP screening, and AML/CFT risk assessment are related but distinct parts of the compliance framework.
How do we assess client risk?
After the information has been reviewed and verified, we assess the overall risk profile of the business relationship. The classification helps determine the appropriate level of due diligence, the intensity of monitoring, and whether enhanced measures are required.
Low risk
A lower-risk profile means the information is clear and the identified factors indicate a lower level of AML/CFT risk. Required due diligence still applies, and ongoing monitoring still applies. A lower-risk classification does not mean that KYC ends after onboarding.
Medium risk
A medium-risk profile may involve factors that require more information, clarification or monitoring. These may relate to the business model, ownership structure, countries involved, expected transactions or another relevant factor.
Additional questions do not automatically mean that something is wrong. They help us document and understand the relationship correctly.
High risk
High risk
A higher-risk profile requires a more detailed compliance approach. Depending on the legal basis and the risk factor involved, enhanced due diligence may be mandatory. This can mean additional documents, information on source of funds or wealth, senior-management approval, and more intensive monitoring.
Our purpose is not to treat a risk factor as proof of wrongdoing or to look for arbitrary reasons to reject a client. At the same time, the legal requirements set clear limits on onboarding.
What happens after the initial KYC review?
If the required due diligence can be completed
Once the necessary information has been reviewed and verified, we confirm the next onboarding steps. From there, we can move forward with the agreed services.
Completion of KYC does not mean the compliance process ends. RahaPTS requires ongoing monitoring of the business relationship.
This includes checking:
- whether transactions are consistent with our knowledge of the customer and risk profile
- regularly updating relevant KYC information
- identifying the source and origin of funds used in transactions
- paying additional attention to unusual transactions
- higher-risk geographical connections.
For this reason, the KYC verification process continues on an ongoing, risk-based basis, not only when a major event occurs. KYC information must be kept appropriately up to date as part of ongoing monitoring. Changes in ownership, management, business activity, operating countries or transaction patterns can all create a reason to request updated information.
If the required due diligence cannot be completed
There is also an important legal outcome when the required checks cannot be completed. Under RahaPTS, we must not establish the business relationship if we are unable to apply the required due diligence measures.
For an existing relationship, failure to provide information or documents required for due diligence can also result in termination of the business relationship and relevant reporting obligations where the statutory conditions are met.
This is why timely and complete responses to KYC questions matter. The goal is to complete the legally required review fairly and consistently, but onboarding cannot proceed where the statutory due diligence requirements cannot be satisfied.
How we use KYC information
The purpose of statutory AML/KYC data must remain clear. Personal data collected under RahaPTS may be processed for AML/CFT purposes. So it`s not subsequently be processed for an incompatible purpose, such as marketing. New customers must also receive information about this AML/CFT-related data processing before the business relationship is established.
For clarity, we distinguish statutory KYC/AML information from information that may separately be requested for service delivery. KYC information is not collected to determine what marketing or commercial offers should be presented to a client. Information required separately for accounting, legal, tax or advisory services should be handled on the appropriate basis for providing those services.
This distinction allows us to keep the purpose of AML/CFT processing clear while still collecting other information that may legitimately be required to provide an agreed professional service.
KYC verification process and e-Residency: what clients should know
For entrepreneurs using Estonia’s e-Residency program, KYC is a normal part of working with professional service providers that are subject to AML/CFT obligations. E-Residency gives digital access to Estonia’s business environment, but it does not remove the compliance duties that apply to a company or to its professional service providers.
The practical sequence is straightforward: you provide the requested information and documents, we verify the information and assess the risk profile, and we apply the due diligence and monitoring measures required for the relationship.
A transparent KYC verification process also means that we explain why additional information may be requested during the KYC verification process. A follow-up question can be a normal part of identification, beneficial-owner verification, source-of-funds review, country-risk assessment, PEP review, sanctions screening or ongoing monitoring.
At Silva Hunt, we want clients to understand what happens after they submit their KYC information and why each step matters. If you have questions about the KYC, company formation or managing an Estonian company through the e-Residency – you can book a call with our team.
Written by Dariia Khimichenko, Marketing Manager at Silva Hunt.
