KYC downgrade process


KYC documents (Identify Proof, Articles of Association, Registration Proof, and Shareholder Declaration) are used to validate the information a user has submitted to the platform, including banking details.

If a user’s identity profile is changed after validation of KYC documents, those KYC documents will no longer be relevant, as what is being validated will have changed. The status of impacted documents will change from 'VALIDATED' to 'OUT_OF_DATE'.

Should any KYC documents have the status 'OUT_OF_DATE' then the user will not fulfill the requirements to be 'KYC Regular' validated.

As such, if key profile information is changed for a KYC validated user, that user will be downgraded from 'KYC Regular' to 'KYC Light' verification status. This will limit the actions that a user can undertake as per AML5 regulations.

Please refer to the following section for further information about KYC limits https://docs.mangopay.com/guide/kyclimits


Scenario


The following is a use case of when a KYC document downgrade occurs:

  1. On the platform, the user modifies one of the relevant fields listed below.
  2. All documents submitted by the user will pass to OUT_OF_DATE status
  3. We will re-trigger the KYC calculation: if any of the required documents are missing or do not have VALIDATED status, then the KYC level will be downgraded from KYC Regular to KYC Light.

Please note, a document will be downgraded if it has been submitted (with VALIDATION_ASKED status) even if it hasn't yet been validated.


Relevant fields


Changes to the following information fields, after KYC validation or submission of KYC documents, will result in an automatic downgrade to Light (default) verification.

Change of identity details

Natural user: 

FirstName
LastName
Birthday
Nationality


Legal user (all types – business, partnership, soletrader, organization):

LegalRepresentativeFirstName
LegalRepresentativeLastName
LegalRepresentativeBirthday
LegalRepresentativeNationality

Please note: This downgrade will also apply if the user has been validated with the inverse information for FirstName and LastName and the user profile is then subsequently altered.

Behavior with user category

A Payer user has the value null for Birthday and Nationality (or LegalRepresentativeBirthday and LegalRepresentativeNationality) but this information is required for an Owner. The modification from Payer to Owner, replacing null with a value, will trigger the downgrade mechanism described above.

This is only relevant if the Payer has requested verification (IDENTITY_PROOF document in VALIDATION_ASKED) or been verified (which is an exceptional case: usually a Payer will not be verified.)

The UserCategory parameter is mandatory, but remains technically optional while platforms integrate it in their onboarding flows. If it is not supplied, or if the user was created before May 2022 when UserCategory was introduced, then the user is categorized as Unknown.

If a user is Unknown, they will not trigger the downgrade upon becoming Owners. They will retain their KYCLevel of REGULAR regardless of the order in which the changes are made:

  • Unknown → KYC validated → Payer → Owner
  • Unknown → Payer → KYC validated → Owner
  • Unknown → KYC validated → Owner

After the transition period, all legacy Unknown users will be categorized by MANGOPAY. If they are categorized as Payers, the exemption from the downgrade will still apply. Only users created as Payers (who never had the category Unknown) can be downgraded.

Please refer to the User Verification article for more information regarding verification and user categories.

Change of legal person type

A change in the LegalPersonType will result in an automatic downgrade to Light (default) verification. This downgrade applies regardless of the initial and subsequent values:

  • from BUSINESS to SOLETRADER, PARTNERSHIP, or ORGANIZATION
  • from PARTNERSHIP to BUSINESS, SOLETRADER or ORGANIZATION
  • from SOLETRADER to BUSINESS, PARTNERSHIP, or ORGANIZATION
  • from ORGANIZATION to BUSINESS, PARTNERSHIP, or SOLETRADER

In this case, only the REGISTRATION_PROOF document will be flagged as OUT_OF_DATE.


Notifications


Hooks are available to provide notification of when a user has lost its KYC status for an identity change reason.

USER_KYC_LIGHT notifies the platform that a user's KYC verification level has been downgraded to KYC Light

KYC_OUTDATED notifies the platform that for one of its user, a document’s status has been changed to OUT_OF_DATE

USER_KYC_REGULAR notifies the platform that a user has been KYC validated



Example of USER_KYC_LIGHT hook subscription:


Note this hook functions normally, as per all other MANGOPAY hooks.

Notification will be sent to the designated URL should a user be downgraded to 'KYC Light' status:

your-site.com?EventType=USER_KYC_LIGHT&RessourceId=Id&Date=Timestamp

Note: The Id is that of the User

The creation of this Hook is as follows: 

{

        "EventType": "USER_KYC_LIGHT",
        "Url": "http://www.test.com"

}

Please refer to the Hooks section of this documentation for further information.

Upgrading KYC status


Should an end user lose their KYC validation due to a document being marked as OUT_OF_DATE. The user will need to resubmit new documents, and these to be validated, in order to regain the 'KYC Regular' verification.


Please refer to the User Verification section of this documentation for further information.

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