Future Guide of Crypto Wallet

KYC in the world of CryptoCurrency

When we think of cryptocurrency, we think of international transactions that are cheaper and faster. However, people should be aware that using it can lead to a variety of criminal activities, including Money Laundering.

Money laundering is a major issue all over the world, and AML is used to prevent it, as well as terrorist financing and other criminal activity.

KYC regulations are designed to reduce identity theft and fraud by requiring businesses to collect and verify key information about customers in order to truly understand who they are.

KYC is the process of identifying your customers before making transactions. This is a common approach of many different organizations, including crypto companies and financial institutions involved in crypto assets.

The KYC process necessitates basic personal information such as a person’s name, address, and date of birth.

Additional KYC verifications and other documentation include government identification such as a passport. Verifying is an important step to provide better security for end-users and crypto companies.

In the crypto active world, subsequent shifts will use KYC authentication by default. It is an attempt to meet regulatory requirements within their jurisdiction. KYC acts as one of the first and most important defensive lines for companies operating in the crypto active markets.

With KYC, you can link the transaction data of a cryptocurrency owner – a device that stores public or private keys for cryptocurrency transactions – to break the relative anonymity of each transaction.

Why KYC is critical for cryptocurrency exchanges in particular?

  • Increased Customer Confidence from KYC

Exchanges can demonstrate trustworthiness to inexperienced users by implementing KYC procedures.  

Identity verification solutions not only help identify the exchanges in determining who uses their services and identify criminals from legitimate customers but increase customer confidence.  

Knowing that KYC measures have been implemented will help the new applicant know that criminals are not being exchanged. This is especially true for peer-to-peer exchanges, in which users trade with one another.  

However, without an effective AML and KYC program, exchanges will be unable to access this massive market because potential customers will be concerned about the security of their funds. 

  • KYC reduces the possibility of Financial Crime

Exchanges are targets of major financial crime in the cryptocurrency market. When malicious users register with exchanges, they open the door to hacks, scams, and phishing. 

KYC procedures reduce the likelihood of financial crime by identifying and verifying users. This eliminates known criminals and high-risk candidates, lowering the likelihood of illicit activity taking place through the exchange or wallet. 

To use these services, customers must have faith in the other users. When an exchange is riddled with scam artists, criminals, and fraudsters, users stop trading with one another. KYC becomes even more important in this context because it identifies high-risk users as well as criminals. 

  • Onboarding CryptoCurrency Customers

Onboarding is the process of converting potential customers into active users of a product or service.  

KYC, also known as customer due diligence (CDD), should be implemented even though AML regulations apply to ensure customers are who they are. 

Money laundering has skyrocketed around the world, and as we recently discovered, illicit activities in the cryptocurrency have been steadily increasing. 

Exchanges should add identity verification services to various points within their environments to help reduce money laundering and meet compliance standards to stay ahead of regulators. 

While KYC can help protect your transaction from financial criminals, manual processes have their own set of issues, such as expensive third-party services, long wait times, and data security breaches. 

Fortunately, FACEKI solves all these issues with a single pre-packaged automated KYC solution. We help you cut out friction and unnecessary costs in your onboarding while ensuring you remain compliant with all AML regulations, now and in the future. 

So, are you ready to learn more about how FACEKI can help ensure KYC compliance at your crypto exchange?