As related to Know Your Customer (KYC) and Know Your Business (KYB), fraud refers to the intentional act of providing false or misleading information to financial institutions or businesses to deceive and gain an unlawful advantage.

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This can involve the use of counterfeit documents, stolen identities or fabricated financial data to open accounts, obtain credit, or conduct transactions under false pretenses.
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Fraud in KYC undermines the integrity of the financial system by enabling activities such as money laundering, terrorist financing, and other illicit financial activities.
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Effective KYC procedures aim to detect and prevent such fraudulent behavior by thoroughly verifying the identity and background of customers, ensuring that all information provided is accurate and legitimate and then performing screening using this provided information.