KYC and compliance in commodity trading

Before goods, prices or contracts are discussed, both sides of a transaction must know who they are dealing with. Here is what a know-your-customer check covers and why it protects you.

Last updated: October 20264 min readAndalucia Premium

In brief

KYC verifies that a company exists, who owns and controls it and that it may legally trade the product.

Sanctions screening covers companies, beneficial owners, vessels, origin and payment routes.

A counterparty that refuses verification is a reason to stop, not to negotiate.

What is KYC in commodity trading?

KYC (know your customer) is the verification of a counterparty’s identity, ownership, legitimacy and capability before a business relationship begins. In commodity trading it applies to buyers and sellers alike.

The check answers four questions: Does the company exist? Who ultimately owns and controls it? Is it allowed to trade this product in this jurisdiction? Can it realistically perform, that is, deliver the goods or pay for them?

Banks, inspection companies and terminals carry out their own checks as well. A clean KYC file at the start makes all later steps faster.

Which documents are required for a KYC check?

Usually a recent commercial register extract, articles of association, identification of directors and beneficial owners, proof of registered address and a company profile. Product-specific licences or references may be added.

Certificate of incorporation and current register extract
Articles of association or equivalent
Passport copies of directors, signatories and beneficial owners
Shareholder structure down to the natural persons
Proof of address of the company
Tax or VAT registration
Depending on the product: export or import licences, refinery or mill references, storage contracts

The exact list depends on product, jurisdiction and the banks involved.

What is a beneficial owner?

A beneficial owner is the natural person who ultimately owns or controls a company, directly or through other entities. EU anti-money-laundering rules generally treat a holding of more than 25% as an indication of ownership.

Control can also exist without shareholding, for example through voting agreements or the right to appoint management. That is why we ask for the complete ownership chain down to the natural persons. Complex structures are not a problem in themselves, but they must be transparent and explainable.

How does sanctions screening work?

Names of companies, owners, directors and, where relevant, vessels are checked against sanctions lists. The origin of the goods, the destination and the payment route are also assessed.

The main reference for us is the EU consolidated list of financial sanctions, together with UN Security Council lists. Depending on currency, banks and parties involved, other regimes such as those of the United Kingdom or the United States may also be relevant.

Sanctions do not only target names: certain products from certain countries are restricted as such. A transaction can therefore be prohibited even if no listed person is involved.

Why are commodities a high-risk sector for money laundering?

Because high values, cross-border flows, complex ownership chains and many intermediaries make it possible to disguise the origin of funds or goods. Supervisory authorities therefore expect thorough checks.

Typical risk patterns are over- or under-invoicing, payments from third parties unrelated to the contract, shipments to unusual destinations and goods whose origin cannot be traced. Precious metals and petroleum products are especially sensitive. For us, any unexplained deviation means the transaction is paused until it is clarified.

Which warning signs appear during a KYC check?

Refusal to provide documents, inconsistent company data, unverifiable addresses, recently founded companies offering very large volumes and payments routed through unrelated third parties.

Register data that does not match the documents provided
Free email addresses instead of company domains
Signatories without verifiable authority
Pressure to skip verification “because the deal is urgent”
Bank details in a country unrelated to the company

How long does a KYC check take?

With complete documents, often a few working days. Incomplete files, complex ownership structures or high-risk jurisdictions can extend it considerably.

The fastest route is to send a complete, current set of documents at the beginning. We tell you at the start which documents are needed for your product and role, so the check can run in one pass.

Last updated: October 2026This page provides general information about trade practice. It is not legal, tax or investment advice.

FAQ

Frequently asked questions

Commodity trading questions, answered

Do suppliers also have to pass KYC?

Yes. We verify sellers just as thoroughly as buyers, including proof that they actually control or have access to the goods offered.

Is my KYC data shared with the other party?

Only to the extent required for the transaction and with your consent, for example the company name and registration data needed for the contract. Personal identification documents are handled confidentially and in line with data protection law.

Do I need to repeat KYC for every deal?

Not completely. Once verified, a counterparty usually only needs to update changed or expired documents, although the specific transaction is screened again each time.

What is enhanced due diligence?

Enhanced due diligence is a deeper check applied to higher-risk cases, such as complex ownership, politically exposed persons or sensitive products and jurisdictions. It can include additional documents and the source of funds.

What is a politically exposed person?

A politically exposed person holds or has held a prominent public function, such as a minister or senior official. Business with such persons is possible but requires enhanced checks under anti-money-laundering rules.

Why do you need proof of capability?

Because a company can be properly registered and still be unable to deliver or pay. Proof of capability, such as production references, storage contracts or bank comfort, shows that the transaction is realistic.

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