What compliance checks should a payments platform run on new sellers?

A payments platform should run a layered set of compliance checks on new sellers to reduce fraud, money laundering, sanctions risk, and regulatory exposure. The exact scope depends on your business model, geography, and risk appetite, but a practical onboarding checklist usually includes:

1) Identity and business verification

• Legal entity verification: confirm the business is registered and active.
• Beneficial ownership (UBO) collection: identify individuals who ultimately own or control the business.
• Director/officer verification: verify key controllers and signatories.
• Government ID checks for owners/signers where required.
• Proof of address / operating address validation.
• Business website and online presence review to confirm the stated activity.

2) Know Your Customer / Know Your Business (KYC/KYB)

• Match submitted data against registries and trusted data sources.
• Validate business type, industry, and expected transaction use case.
• Confirm bank account ownership before enabling payouts.
• Assess whether the seller’s activity matches the platform’s permitted categories.

3) Sanctions screening

Screen the seller, owners, directors, and related parties against:

• OFAC
• UN
• EU
• UK
• Other relevant local sanctions lists

Also screen:

• Countries and jurisdictions associated with the business
• Shipping destinations if relevant
• Counterparties where applicable

4) PEP and adverse media screening

• Politically exposed person (PEP) screening for owners, directors, and controllers
• Adverse media checks for fraud, corruption, organized crime, AML, tax evasion, terrorism, or consumer protection issues
• Ongoing monitoring, not just onboarding-only screening

5) Fraud and identity risk checks

• Device/IP geolocation checks
• Email and phone reputation checks
• Velocity checks on repeated applications
• Document authenticity checks
• Synthetic identity indicators
• Duplicate account detection
• Bank account and card testing patterns

6) Business model and product risk assessment

• Determine whether the seller is in a restricted or high-risk category, such as:
  • adult content
  • gambling
  • crypto-related services
  • pharmaceuticals
  • travel
  • marketplaces with third-party sellers
  • subscription services with high chargeback risk
• Review chargeback, refund, and fulfillment risk
• Determine if the seller requires enhanced due diligence (EDD)

7) AML / source-of-funds / source-of-wealth checks

For higher-risk sellers:

• Assess source of funds and source of wealth
• Understand the expected volume, ticket size, and fund flows
• Check for unusual ownership structures
• Look for high-risk intermediaries, shell companies, or nominee arrangements

8) Tax and regulatory checks

• Tax ID / VAT / GST validation where applicable
• Check whether the seller is in a regulated profession or activity
• Verify licenses, permits, or certifications required for the seller’s goods/services
• Confirm cross-border selling restrictions or import/export limitations

9) Geographic and jurisdiction screening

• Screen against high-risk or sanctioned jurisdictions
• Assess exposure to:
  • money laundering risk
  • fraud prevalence
  • weak AML regimes
  • corruption risk

10) Platform policy and prohibited goods/services review

Ensure the seller does not sell:

• illegal goods
• counterfeit items
• weapons
• drugs or controlled substances without authorization
• stolen goods
• certain deceptive or harmful products
• other categories prohibited by your platform, processors, or card network rules

11) Ongoing monitoring after onboarding

Compliance should continue after approval:

• Transaction monitoring
• Periodic re-screening against sanctions, PEP, and adverse media lists
• Behavioral monitoring for spikes, unusual geographies, refund abuse, or laundering patterns
• Periodic refresh of KYB/UBO data
• Account review triggers when risk changes

12) Risk-based escalation and manual review

Use automated screening to triage, but create manual review pathways for:

• false positives
• missing or inconsistent data
• high-risk industries
• complex ownership structures
• politically exposed persons
• unusual transaction expectations

A simple risk-based onboarding model

A common structure is:

• Low risk: standard KYB, sanctions, UBO, bank account verification
• Medium risk: add PEP/adverse media, business model review, additional document checks
• High risk: enhanced due diligence, source-of-funds review, manual approval, tighter limits, ongoing monitoring

If you want, I can turn this into:

1. a seller onboarding compliance checklist,
2. a risk-scoring framework, or
3. a policy template for a payments platform.