Playbook: Background KYC Monitoring

Background KYC runs automatically for every investor when they create an investment. Unlike blocking verification (which gates payment dispatch), background KYC is fire-and-forget -- it never blocks the investment or payment flow. The admin team is responsible for monitoring results and intervening when the compliance provider flags issues.

How Background KYC Works

1. Trigger: When an investor creates an investment, the system queues a background KYC submission.
2. Submission: The system submits the investor's identity to the compliance provider.
3. Deduplication: If the identity is already Pending, In Review, or Approved, the submission is skipped so we don't double-submit.
4. Grandfathering: Pre-V2 investors who were carried over as already Approved are skipped automatically.
5. Result: The outcome is recorded in the investor's verification history and in the audit trail.
6. No blocking: Regardless of the outcome, the investment and payment flow continue unaffected.

Background KYC is controlled by a setting on the compliance policy (see the admin dashboard). When it is disabled, no background KYC is submitted.

What to Monitor

Verification Records

Check for KYC verification records with concerning statuses:

Audit Trail Entries

Background KYC writes entries in the Compliance category of the audit trail. Each entry tells you whether KYC was submitted, skipped, or failed for a given identity, and which investment triggered it.

Key Indicators to Watch

• High failure rate: If a significant percentage of background KYC submissions are failing, there may be a provider issue.
• Repeated failures for the same person: May indicate bad identity data that needs correction.
• "Needs Info" piling up: Investors may need to be contacted proactively.
• Provider timeouts: If submissions are timing out, the provider may be experiencing issues.

When to Intervene

Background KYC issues do not block investments, so there is no urgency to resolve them immediately. However, you should intervene when:

Rejected Verification

1. Open the investor's most recent verification record to see the failure reason.
2. Look at the investor's identity data in the admin panel.
3. If the data looks incorrect, contact the investor to correct it.
4. If the data looks correct but was rejected, investigate with the compliance provider.
5. The investor can update their information on their profile detail page at /account/profile/[profileId].

Needs Info

1. Open the verification record to see what documents or information are requested.
2. Contact the investor explaining what is needed in simple terms.
3. The investor can provide updated information through their profile detail page.
4. Once updated, you can re-trigger KYC from the admin panel using the "Submit KYC" button on the person page.

Repeated Failures

1. Check if the same investor is failing KYC across multiple investments.
2. This usually indicates a data quality issue (typo in name, wrong SSN, etc.).
3. Contact the investor to verify and correct their identity information.
4. Once corrected, the next investment will trigger a fresh KYC submission.

Common Issues and Resolutions

Relationship to Blocking Verification

Background KYC and blocking verification are independent:

Both can be active simultaneously. In the current default configuration, background KYC is enabled and verification blocking is set to Skip -- meaning KYC runs in the background for all investors but never blocks any investment.

Related Playbooks

• Verification Issues -- handling KYC/KYB problems when verification blocking is active
• Stuck Investment -- diagnosing investments that aren't progressing
• Understanding the Audit Trail -- how to read audit trail entries