How KYC Works for Prop Firms

Short answer: prop firms run KYC (Know Your Customer) to confirm that the person they are about to pay is a real, eligible individual. Most firms verify identity before the first payout rather than at challenge purchase, using a specialist KYC provider for the document and liveness check. PropExecutor does not run KYC: it runs the trading side, and your KYC provider's result is matched to the trader record you keep in PropExecutor by name and email.

What KYC means for a prop firm

KYC is the set of checks a business runs to confirm who its customer is. For a prop firm the customer that matters is the trader you are about to send money to, so KYC usually covers:

• Identity: a valid government photo ID (passport, national ID or driving licence).
• Liveness: a selfie or video check that the person holding the ID is present.
• Proof of address: asked for by some providers, often only above a payout threshold.
• Sanctions and watch lists: screening the person before you pay them.
• Country of residence: confirming the trader is not in a country you have chosen not to serve.
• Payment destination: the bank account or wallet is in the verified person's name.

Requirements differ by country, by payment provider and by the size of the payout. Treat the list above as general information and confirm what applies to your firm with a qualified local professional.

Why prop firms verify traders

Payment processors expect it. Card processors and payout providers treat prop firms as a higher risk category. Verifying who you pay is one of the controls they look for.

Fraud and chargebacks. Challenge fees are often paid by card. Verifying identity before money leaves the firm makes it much harder to cash out on a stolen card.

One person, one identity. Many firms cap how many funded accounts or how much allocation one person can hold. A verified identity is what lets you enforce that cap across accounts opened under different emails. Our guide on detecting multiple accounts held by one person covers the other signals.

A clear record. When a payout is questioned later, a stored verification result and the name of whoever approved the payout settle most disputes quickly.

When to run KYC

There are three common points, each a trade between control and friction:

1. At challenge purchase. The strongest control, but every buyer pays the friction and you pay for a check on people who will never reach a payout.
2. When a trader passes. The trader is verified before the funded account is issued, so the first payout is not held up.
3. Before the first payout. The most common choice, because only traders who have earned a payout go through the check.

Whichever you choose, say so in your terms and at checkout: that KYC is required before any payout, which documents you accept, and that payouts go only to the verified person. Traders who are surprised by identity checks at payout time are the ones most likely to complain. More detail is in when to run KYC on a trader.

Where KYC sits in your stack

A prop firm runs on several systems, and KYC is one of the parts the firm owns directly, next to its website, checkout, payments and payouts. The prop firm tech stack guide walks through all six.

PropExecutor is the trading part of that stack: the branded terminal, the rule engine that judges every account on every price tick, and the admin panel where you provision accounts and hand out credentials. It deliberately does not include KYC, a trader checkout, trader payments or payouts, and traders never sign up with PropExecutor. The full list is in what PropExecutor does not include.

PropExecutor also stores very little about a trader: a trader record holds a name and an email, plus the trading accounts assigned to it. Identity documents, selfies, addresses and payment details stay with your KYC and payment providers, which keeps the data you have to protect in one place.

A practical workflow with PropExecutor

Here is how the pieces fit for a firm that verifies before the first payout:

1. A trader buys a challenge on your website. Your checkout takes the payment.
2. You assign them a trading account. Accounts are created in bulk in the admin panel. Your backend can assign one to the buyer by name and email over the API (PUT /v1/accounts/:number/trader), which creates the trader record if it does not exist yet.
3. The trader trades. They log in to the terminal with the Account Number, Password and Server you sent them. Rules are enforced on every tick, whether or not they have been verified.
4. The trader passes and requests a payout. You send them to your KYC provider and match the verified name to the trader record in PropExecutor.
5. You review the account. The account report (GET /v1/accounts/:number/report) gives your back office the whole account in one request: every deal, the equity curve, the frozen rules and any breach reasons. Because a trader record can hold several accounts, you can see everything assigned to that person in one place.
6. You pay, or you refuse. Payouts run through your own payment provider.

If verification fails, cut access from the admin panel: unassign the account, or rotate its password. Either one ends every live terminal session for that account at once. A real handover to someone else is unassign, rotate, then assign.

What KYC costs

KYC providers usually charge per check, with the price depending on which checks are included and on your volume. Verifying at the first payout keeps the number of paid checks close to the number of funded traders, not the number of challenge buyers. The KYC cost guide covers how firms keep it under control.

The trading side is a one-time payment on PropExecutor: Starter is $129 once for 50 accounts, Basic $499 once for 250, and Growth $1,799 once for 1,250, with no monthly fee. Plans and limits are on the pricing page.

KYC practices that save trouble later

• Publish the policy in your terms and FAQ before anyone buys.
• Apply one checklist to every trader, and record who approved each payout.
• Review quickly. A trader waiting on a first payout notices every day of delay.
• Make names match. Ask traders to use the name on their ID when they buy, so the trader record, the KYC result and the payout destination agree.
• Revisit it as you grow. What works at 50 traders may not hold at 1,000, and the rules in your markets change.

PropExecutor is software for running a prop trading firm. Its accounts are simulated, it is not a broker, and nothing on this page is legal, tax or financial advice. Rules on licensing, identity verification, data protection, tax and payments differ by country and change, so check them with a qualified local professional.