Introduction
This article explains how Know Your Customer (KYC) processes can help safeguard music distribution platforms from fraudulent activity. It outlines practical measures to vet new artists, labels, or clients before granting them access to a distribution system, ensuring alignment with industry expectations and compliance standards.
Why Implement KYC Processes?
Strong Know Your Customer (KYC) procedures help mitigate the risks associated with onboarding fraudulent or non-compliant clients. These processes are particularly important when managing:
- Artist distribution platforms
- Label distribution services
Sub Accounts operating under a Primary Account
Benefits include:
- Fraud Prevention: Early vetting of clients reduces exposure to harmful practices such as fake streaming or unauthorised content distribution.
- Business Protection: Helps preserve brand reputation and operational integrity by ensuring only verified, trustworthy users gain access.
Digital Service Provider (DSP) Compliance: Many DSPs expect distribution partners to maintain thorough vetting protocols to avoid enabling the delivery of fraudulent content.
Steps for Client Vetting
To develop a robust KYC process, consider incorporating the following steps:
1. Collect Core Identification Details
Request standard identity information:
- For individuals: Full legal name, date of birth, residential address, passport, national ID, or driver’s license and individual details match publicly available data, and conduct sanction checks and risk Screenings
For businesses: Registered company name, business registration number, contact information, incorporation records, tax documentation, ownership verification, and conduct sanction checks and risk Screenings
2. Check IP Address Origin
Compare login IP addresses with the stated geographic location. Anomalies, including persistent VPN use, can indicate risk.
3. Review Online Presence
Examine the digital footprint of the prospective client:
- Active, relevant social media channels
- Functional websites or artist/label profiles
This step adds credibility and demonstrates real-world activity.
4. Review Payment Method Consistency
- Payment methods are registered under the vetted individual or business
No discrepancies suggest potential fraud or identity misuse
5. Request Creative Samples
In cases where applicable, requesting samples of previous releases or catalog items can help:
- Establish that the artist or label is an authentic creator
- Understand their content history and quality
Managing Higher-Risk Clients
In cases where warning signs are detected during onboarding, it is advisable to have tiered risk-handling procedures, this may include:
- Collecting additional documentation
Performing more in-depth operational or financial review
Reject High-Risk Sign-Ups
If a client fails to meet essential verification thresholds, it is appropriate to decline their application to protect the platform’s compliance and reputation.