Online Identity Verification Services

How Small Businesses Can Master KYC Without Big-Bank Resources

KYC started as a measure to prevent fraud and money laundering and was originally required only for banks, insurers, and other financial institutions. Today, it’s something every business involved in transactions or regulated markets must do.

But as KYC expanded beyond traditional finance, the tools didn’t keep up. Most existing solutions still cater to big enterprises with compliance teams, large budgets, and months to spare for integration.

We spoke with more than 30 startup founders and compliance managers to understand why KYC so often becomes a challenge for small teams. Here are the KYC issues they mentioned most often.

Why KYC Can Be a Burden: Common Challenges SMBs Face

1. Most KYC Technology Solutions Are Built for Enterprises

“Every solution I look at feels made for big corporations. I don’t have lawyers or a compliance team to run this. I just want to get compliant without turning my startup into a bank.” — Early-stage crypto exchange founder, team of 5–10.

Most automated KYC solutions don`t cater to the needs of smaller businesses. These systems were designed with large institutions in mind, those that have compliance departments, legal teams, and full-time engineers. To get them up and running, you often need dedicated developers for API integration, someone to handle sandbox testing, and a compliance officer to map out every verification rule.

Then come the onboarding sessions, training calls, and documentation reviews that can stretch for weeks before you even verify your first customer. For a five- or ten-person team trying to move fast, that’s time and money you simply don’t have.

On top of that, the pricing models are often very rigid. Lower-tier plans usually include very basic KYC. To keep all checks in one system (ID, AML, KYB, etc.), you’re usually forced to upgrade to an enterprise tier.

2. Varying Regional Standards and Documentation Requirements

At a high level, most countries follow the same core AML/KYC principles set by the Financial Action Task Force (FATF). But FATF only defines the standards. Each country (or region) implements them differently — with its own risk thresholds, documentation types, and reporting rules.

Let’s take Europe, for example. The EU tries to harmonize AML/KYC through directives like AMLD5, AMLD6, and now the upcoming EU AML Regulation. Still, each member state transposes these directives into national law, which means France, Germany, and Lithuania might interpret the same rule differently.

In practice, this adds complexity to the verification logic. KYC automation solutions must support different KYC flows and document combinations, which isn’t always the case. And if the provider’s database doesn’t recognize certain local IDs, your team ends up doing manual reviews — eating into hours that should be spent on real work.

3. Systems Don’t Scale with the Business

Scaling KYC for SMBs isn’t just about handling more users. It usually involves expanding coverage. There comes a moment when you need support for new markets and document types, risk-based workflows, team permissions, and richer reporting for regulators. Most tools weren’t built for that kind of agility.

When volumes spike, performance drops. When you add jurisdictions, integrations break. When your team grows, permissions become messy. And when auditors ask for data, it takes days instead of minutes to pull reports. Without transparency and flexibility, growth turns every verification step into a bottleneck.

4. KYC Expenses Can Get Out of Control

It’s not just the price of the KYC compliance solution that hurts; it’s everything around it. When KYC in business isn’t automated or built efficiently, costs start creeping in from every direction.

Manual reviews are usually the first hidden expense. If your team is checking every ID or cross-referencing AML databases by hand, the real cost per verification can jump from $1–$2 to $5–$10 once you factor in time and payroll. Even a few thousand checks a month can turn into a full-time salary spent on manual work alone.

Poor user experience adds another invisible cost. If KYC onboarding takes too long or fails too often, users drop off. For fintech and iGaming businesses, even a 5–10% drop during onboarding can translate to thousands in lost revenue each month. That’s money gone before you even have a chance to convert those users.

And finally, inefficiency brings KYC risks. Missed verifications or outdated watchlists can trigger compliance breaches with fines that easily reach tens or hundreds of thousands of dollars, plus the operational chaos of re-verifying your user base under pressure.

5. No Post-Onboarding Visibility

Real compliance doesn’t stop at onboarding — it’s a continuous process. Without proper monitoring, businesses lose visibility into what happens next. A user who passed verification six months ago could now appear on a sanctions list, change their address to a high-risk region, or start transacting suspiciously. If your KYC system isn’t tracking that, you won’t know until it’s too late.

Most SMBs rely on static data, manual reviews, or periodic audits — all of which leave wide gaps in oversight. When regulators come knocking, you need to show not only who you verified, but how you’re keeping those profiles up to date.

For example, the 6th EU AML Directive (AMLD6) explicitly requires ongoing due diligence and event-driven reviews. Yet for smaller teams, maintaining that level of vigilance without automation is nearly impossible.

How Allpass.ai Solves These Challenges

The challenges above are very real pain points that founders trying to stay compliant face while growing their businesses. We built Allpass.ai with one goal: to make KYC and AML simple enough for startups, but powerful enough to meet enterprise standards.

1. Built for Speed, Not Bureaucracy

You can start verifying users right away, even before full integration. Create a KYC process flow, add an applicant manually, and send them a secure link. The system automatically collects documents, performs the necessary checks, and organizes everything in one place. Your team simply reviews and approves.

Teams that prefer advanced automation can use the Web SDK to integrate KYC into their product or website. There’s also an API and webhooks that allow setting up any other necessary workflows.

Both options help speed up verification and reduce manual work. Our customers’ experience shows that it takes less than a week to have their account set up, which is critical for smaller teams.

2. Adaptable to Any Market or Regulation

Allpass.ai gives compliance teams the tools they need to customize checks to their market, ensuring every verification meets the right rule, every time.

The flow builder is completely no-code, so compliance officers can create or update a KYC process flow in minutes. Each flow is made of modules, and every module represents a specific type of verification. You can fine-tune every step to match local or industry standards without ever starting from scratch.

Take document verification as an example. You can define exactly what type of document is required, restrict documents from specific countries, set age limits, and even choose how long a verification remains valid.

This flexibility helps businesses stay compliant with both global and local regulations, from major regulators like the FCA, FINMA, and CySEC, to more specific regional standards.

3. Built to Scale as You Grow

You can enter new markets with confidence because Allpass.ai supports over 14,000 ID types from 250+ countries and territories, making it one of the most globally complete digital KYC solutions available.

Growing teams also get full control over access and security. With custom role management, you can define who can view, edit, or approve verifications — ensuring compliance and oversight as your operations scale.

Behind it all, AI-powered document verification, face matching, and liveness checks keep fraud prevention efficient, even at high volume.

4. Transparent Pricing and Real Cost Control

Once you create your Allpass.ai account, you get access to every feature from day one. You can start with three manual checks for free, and pricing begins at $299.

As your business grows, you simply move to a larger package with more verification credits. You’re only charged per verification, and only when you use the service.

Allpass.ai also helps reduce operational costs through automation. The system automates the entire KYC process flow, verifying IDs, checking liveness, and screening applicants against over 3,000 global watchlists, including sanctions and politically exposed persons (PEPs). These databases are constantly updated, allowing your team to focus on actual compliance work rather than repetitive checks.

Faster verification means smoother onboarding and fewer users dropping off mid-process. And as you grow, your cost per verification actually decreases, since larger volumes come with lower per-check pricing.

5. Continuous Monitoring and Full Visibility

You can enable automated AML and crypto KYT monitoring to keep track of risk after onboarding. The system screens users and transactions against global sanctions, watchlists, and PEP databases in real time, helping you stay compliant with ongoing due diligence requirements.

Inside the dashboard, compliance teams get a clear overview of every case. Warnings appear automatically if a user’s risk status changes — for example, if a customer is added to a new sanctions list or flagged for unusual crypto activity.

This level of visibility helps you act fast, prevent potential issues, and stay fully KYC compliant without adding more manual work.

To Sum Up

KYC is non-negotiable, and it’s not just about meeting regulatory demands. It’s about protecting your business and the people who trust it.

The right KYC solution can make all the difference in how you manage compliance. It can mean the gap between a smooth, automated process and a system that slows you down.

See how Allpass.ai simplifies the process.

Book a demo to explore the platform and get expert guidance on how Allpass.ai can help your business stay compliant without compromising growth.