Introduction: What is KYC and why is it relevant in the context of carding?
Know Your Customer (KYC) is a set of measures required for financial institutions, crypto exchanges, payment systems, and fintech platforms to prevent money laundering (AML), terrorist financing, and other crimes. Unlike KYC for individuals (KYI), KYB (Know Your Business) is used for businesses, which verifies not only the company but also its owners, beneficiaries, and ownership structure. In the US, this is regulated by FinCEN (Financial Crimes Enforcement Network), the PATRIOT Act, and FATF (Financial Action Task Force) recommendations.In the context of carding — an illegal scheme to steal and use credit/debit cards for fraud — strict KYC is a critical barrier. Carders often try to monetize stolen data by creating fake businesses to withdraw funds through corporate accounts, crypto wallets, or e-commerce. According to Chainalysis (2024), carding accounts for ~15% of all cybercrime, with losses exceeding $10 billion annually. Known-for-credit (KYC) with biometrics (such as Incode) and documents (EIN, Articles) reduces risks by 85–95%, making such schemes ineffective. This analysis is for educational purposes: to understand how security systems work and why bypassing them can lead to legal consequences (fines up to $1 million + prison time under 18 USC § 1028A).
Key Components of Strict KYC/KYB for Businesses
For businesses in the US (LLCs, Corps), verification involves a multi-level check. Here's a breakdown:1. EIN (Employer Identification Number)
- What is it? A 9-digit number from the IRS (Internal Revenue Service) assigned to companies for tax purposes. It's similar to the Taxpayer Identification Number (INN) in Russia. It's issued free online (irs.gov) when registering a business.
- KYC role: Confirms the company's legitimacy as a separate taxpayer. Platforms (e.g., Stripe, PayPal Business) require an official IRS letter with the EIN — scanned and no older than six months.
- In the context of carding: Carders often generate fake EINs through forged SS-4 forms, but IRS cross-checking (via APIs like Middesk) reveals discrepancies. In 2023, FinCEN blocked over 5,000 fake EINs related to carding (data from the FBI IC3 report). Bypass: rarely successful, as the EIN is linked to the owner's SSN and address.
- Educational insight: An EIN is the first "gateway" to KYB. Without it, an account won't be opened, and any attempt to do so triggers AML monitoring.
2. Articles of Organization (или Certificate of Formation)
- What is it? A charter document for an LLC (Limited Liability Company), filed with the Secretary of State's office in your state (such as Delaware or Wyoming — popular for anonymity). It contains the company's name, address, purpose, names of the founders, and registered agent. For corporations, it contains Articles of Incorporation.
- KYC Role: Proves registration in a public registry (verified online, e.g., sos.state.tx.us). Must be apostilled or notarized if from abroad.
- In the context of carding: Carders register "shell" LLCs (shell companies) for laundering purposes — for example, through services like Wyoming Corporate Services ($100–$200). However, KYC requires UBO disclosure (Ultimate Beneficial Owner — owners of >25%), and discrepancies (such as a fake address) trigger a denial. Example: in 2024, Europol's Operation Cookie Monster shut down over 200 fake LLCs used for carding through Shopify.
- Educational insight: This document is public, but its forgery is easily detected through databases (such as OpenCorporates). Carders are at risk because states share data with the IRS/FBI.
3. Biometric verification via Incode (selfie with liveness detection)
- What is it? Incode Technologies is an AI platform for identification, a leader in the Forrester Wave 2025. The process: the user scans an ID (passport/driver's license), takes a selfie; AI analyzes the face (facial matching), adds 3D liveness (movement to distinguish it from a photo/video).
- KYC Role: Mandatory for UBOs and directors. Compares selfies with IDs and checks for deepfakes (99.9% accuracy). Integrates with EIN checks for businesses.
- In the context of carding: Carders use stolen IDs (dark web, $5–50 per passport) or deepfake apps (FaceApp mods), but Incode's anti-spoofing (IR camera + AI) blocks 98% of attempts. Statistics: According to a Juniper Research report (2025), biometrics reduced carding fraud in banks by 92%. Example: Binance banned 10,000+ accounts with fake selfies in 2024.
- Educational insight: Liveness is the key to real-time verification. Without it (as with the old KYC systems), carders could easily pass, but now it's a "wall" with risks (IP logs, geolocation for court).
Comparison Chart: KYC Components vs. Carder Tactics and Vulnerabilities
| KYC component | Description and verification | Carder tactics | Vulnerabilities and consequences | Statistics (2024–2025) |
|---|---|---|---|---|
| A | IRS letter + API check | Fake SS-4 forms, stolen SSN | Cross-check with tax base; block + report to FinCEN | 70% of fake EINs are detected at the FBI stage |
| Articles of Organization | Staff register + UBO-disclosure | Shell LLC in anonymous states (WY, NV) | Public databases + ownership trace; fines of $250k+ | 40% of carding schemes are carried out through fake LLCs (Chainalysis) |
| Incode Selfie | Facial match + liveness | Stolen photos, deepfakes, masks | AI detection + behavioral analysis; ban + criminal prosecution | 95% spoofing blocked (Incode reports) |
| Additional (address, structure) | Statements, shareholding | VPN + fake docs | Geolocation + OCR analysis; traceability | 85% of schemes are disrupted by ongoing monitoring (FATF) |
Why are strict KYC procedures effective against carding? Educational lessons
- Multi-level: A single fake (e.g., EIN) fails if the selfie doesn't match. This is a "chain reaction" — 1% error = total rejection.
- Automation and ongoing KYC: Platforms like Sumsub or Onfido monitor post-onboarding transactions. Carders spend $100–500 on setup but are burned on the first transaction (> $10k flag).
- Global trends 2025: With AI (like Incode's Omni) and blockchain (for UBO tracking), carding is migrating to DeFi, but regulations (EU AMLD6, US CTA) are tightening. Lesson: fraud isn't about "quick money," but 5-20 years in prison (example: Ross Ulbricht).
- For business: Comply - save on fraud losses (average $4.5k per incident, Verizon DBIR 2025).
This analysis emphasizes that KYC isn't bureaucracy, but a security tool. For a deeper dive, I recommend FinCEN reports or the Incode demo. If you need more details (e.g., for a specific country), just ask!
