The $4.5 Million Wake-Up Call

In February 2025, the FCC proposed a penalty of nearly $4.5 million against a prominent voice service provider for alleged violations of the FCC‘s Know Your Customer (KYC) rules.

What did the voice provider do wrong? They failed to properly vet a customer who made roughly 1,800 prerecorded scam calls on their first day of service before Telnyx caught the issue and shut them down.

The FCC‘s message was unmistakable: If you carry traffic for scammers, you are responsible—even if you didn’t know.

What Are the FCC‘s KYC Rules?

The FCC‘s KYC rules require voice service providers to take “affirmative, effective measures to prevent new and renewing customers” from using their networks for illegal robocalls.

In plain English: Before you enable service for a business customer, you must verify who they are, what they intend to do with your network, and whether they pose a risk of generating illegal traffic.

What does this mean in practice?

Carriers must implement a formal KYC program that includes:

Customer Identity Verification: You must collect and verify identifying information about your customers—including name, physical address, and contact information. The FCC is also proposing to require government-issued ID numbers and alternate phone numbers.

Risk Assessment: You must evaluate whether a new customer presents a risk of generating illegal robocalls. High-risk customers may require additional scrutiny.

Ongoing Monitoring: KYC is not a one-time check. You must monitor customer behavior and update your risk assessments over time.

Record Keeping: You must maintain records of your KYC efforts and be able to demonstrate them to the FCC upon request.

The Proposed KYC Expansion

The FCC is not stopping with the current rules. In October 2025, the Commission proposed significant expansions to the KYC framework.

Know Your Customer’s Customer (KYCC): The FCC is formalizing a stringent new framework that requires carriers to verify not just their direct customers but also their customers’ customers. This means you must look further down the call chain to ensure that illegal traffic isn’t flowing through your network.

Know Your Upstream Provider (KYUP): Similar to KYCC, this requires carriers to vet the providers they receive traffic from—not just the providers they send traffic to.

The Goal: The FCC is moving toward an ecosystem built on verified, secure caller identity and strict KYC frameworks to label or quarantine foreign-originated traffic.

The Enforcement Reality

The Telnyx case was a first-of-its-kind enforcement action. But it will not be the last. The FCC has made it clear that KYC enforcement is a priority.

What the FCC is looking for:

– Did the carrier have a KYC program in place?

– Did the carrier actually implement that program?

– Did the carrier take reasonable steps to prevent illegal traffic?

– Did the carrier respond appropriately when illegal traffic was detected?

What happens if you fail?

– Fines: Up to $4.5 million (and counting)

– Reputation damage: Public enforcement actions are a permanent stain

– Operational disruption: Investigations consume time and resources

– Potential RMD removal: Severe KYC failures could lead to de-listing

How to Build a Compliant KYC Program

Building a robust KYC program requires a systematic approach:

Develop Written Policies: Document your KYC procedures, including customer onboarding, risk assessment, and ongoing monitoring.

Train Your Team: Ensure that everyone involved in customer onboarding understands KYC requirements and how to implement them.

Use Technology: Automated KYC tools can help verify customer identities, assess risks, and flag suspicious activity.

Maintain Records: Keep detailed records of every KYC check you perform. The FCC may ask to see them.

Respond Quickly to Red Flags: If you detect illegal traffic on your network, act immediately. The FCC expects prompt action.

The Bottom Line

KYC is no longer a “nice-to-have” for carriers. It is a core compliance obligation with serious consequences for failure.

The Telnyx case sent a clear message: the FCC will hold carriers accountable for the traffic they carry, regardless of whether they knowingly facilitated illegal calls.

At Microtalk, we help carriers implement robust KYC programs that meet FCC expectations and protect against enforcement actions. Because in today’s regulatory environment, knowing your customer isn’t just good practice—it’s survival.

Do you know who is using your network to make calls?