KYC & AML services

When people ask what KYC is, many experts say that it is just an integral part of a comprehensive Anti-money laundering (AML) program. The full name is Anti-money laundering and counter-terrorist financing and counter-weapons of mass destruction financing. AML includes a variety of regulatory processes for countering financial crime. AML also includes software filtering, record keeping, and criminalization. KYC is an AML process which includes personal data verification and advanced due diligence.

According to experts, KYC, AML and other processes developed by regulatory bodies complicate the illegal activities of organized crime and terrorists, preventing them from turning the proceeds of crime into legal proceeds.

The KYC procedure is a multi-stage operation which includes the gathering and analysis of customers' personal information. In order to verify such data, institutions send the information to a variety of independent third-party reviewers. These organizations compare it with official databases to confirm that the information is correct and matches in all respects. Through these procedures, the financial institutions and service providers can determine the risk level for each client, preventing identity theft, fraud, money laundering and terrorist financing.

Banks, exchanges and investment funds are checking a business if they notice operating mostly in cash, keeping money in different banks, investing through brokers and buying cash instruments. With the help of KYC, a bank or an exchange determines the portrait of its client, identifies the user (passport data, details of property), tracks transactions, compares data on the number and content of transfers, counterparties and client's material support. Banks use a KYC and AML policy when providing loans and always ask for a passport and phone numbers.

In the field of blockchain, due to the KYC and AML policy, customers receive a quick conversion of currency into real money, the legality of cryptocurrency and the security of operations. The user knows that the token which came to him/her was not previously used in illegal procedures.

Brokerage companies are required to verify new clients through the KYC procedure. This obliges traders to provide personal information to the brokerage company in order to open a trading account. The failure to comply with these requirements may lead to problems with deposits and withdrawals. For example, brokers regulated by CySEC have begun to tighten the KYC procedure in recent years after the introduction of the MIFID II directive. Offshore brokers are generally more lenient on identity verification requirements.

In their activities, crypto companies often face misunderstanding or even rejection of AML/KYC principles. It is better to note that if you are going to invest in cryptocurrencies, then you should not be afraid of AML procedures, this is most likely an indicator that the crypto company is responsible for its work and provides a safe space for mutually beneficial transactions.

KYC and AML on a crypto exchange

KYC requirements are mandatory on the leading cryptocurrency exchanges. They ensure that the operations comply with regulations and laws. In the past, crypto exchanges rarely requested information for KYC, but as the price of cryptocurrency and interest in it have risen, the crimes related to money laundering and other illegal activities have become more and more troublesome. By means of personal data, cryptocurrency exchanges track transaction patterns, it contributes to the fight against money laundering and terrorist financing.

Without KYC and due diligence, the cryptocurrency exchange can be held accountable and the user can get away with the crime. Therefore, the leading crypto exchanges operate in accordance with Anti-money laundering (AML) laws. However, KYC and AML are different phenomena.

Crypto exchanges have the right to determine the stages of verification themselves, but such information about the user is required: name, date of birth, e-mail, phone number, country and address of residence, ID (passport, driver license, etc.). The more money you want to put on the exchange, the more information you may need. As a rule, there is a basic KYC level, which allows you to perform all basic operations, as well as advanced levels which are required to pass if you want to deposit enormous amounts on the exchange.

Some users believe that full verification is a violation of the principle of anonymity in blockchain technology, but, in fact, KYC is an indicator that the crypto exchange provides a safe space for everyone to conduct transactions.

         The transparency of the blockchain network is an opportunity for users to track the history of any transaction in cryptocurrency. Despite the fact that this information is publicly available, it does not identify the owners of crypto wallets and the reason for the transfer of funds. However, any transaction can be associated with such illegal activities as terrorism, phishing or ransom.

Just to identify funds obtained by criminal means, the AML policy is being implemented on the crypto exchange. It includes a wider range of measures than KYC: monitoring of transactions, checking the crypto for purity (crypto-compliance), risk assessment, verification of bank cards, etc.

In short, the crypto exchange does everything to ensure that not a single cue ball, which has been stolen or used in criminal activity, comes to us.