KYC check: what it is and where it is used
What is KYC procedure and why is it getting so much attention? We tell you how it can keep you safe from fraudsters while preserving your anonymity. KYC and AML checks: why identity verification is needed in the cryptocurrency sphere. KYC (Know Your Customer) is a procedure for verifying a customer's identity and assessing potential risks from them. But why is it needed and why is it almost impossible to buy cryptocurrency today without verifying your identity? Doesn't it contradict the original principles of anonymity and decentralization of the crypto industry? Today we'll break down what AML and KYC verifications are for and how they work. We will also tell you how verification will help reduce the number of scammers while maintaining the basic anonymity of users.
What is AML and what is it for?
Anti-Money Laundering is a set of measures to combat money laundering, terrorist financing and the creation of weapons of mass destruction. This procedure includes identification, storage and mutual exchange of information about customers, their profits and transactions between financial organizations and government agencies. Most classical financial institutions use AML measures to verify businesses that deal in cash or use nal as one of their main assets. They also check those businesses that have money in different accounts, regularly transfer it to other countries and banks, buy futures and other cash settlement instruments. In other words, all businesses that have the potential to circumvent financial monitoring and launder funds are subject to verification.
What does the address verification show?
Total risk (percentage) - the probability that an address is associated with illegal activity. Sources of risk - known types of services with which the address interacted and the percentage of funds accepted from these services, for which the total risk is calculated.
Why does the service insist on AML procedures?
If the service does not conduct such checks, fraudsters may use it as a platform for money laundering and terrorist financing. And then the service itself will be held liable. This is why exchanges and other major cryptocurrency companies implement AML requirements into their business and conduct regular KYC verifications.
How should risk assessment be understood?
- 0−25% − is a good wallet/transaction; - 25−75% − is an average risk; - 75%+ − such a wallet/transaction is considered risky The risk is more than 50%, but I'm sure the address is reliable. What should I do? The results of the verification are based on international databases that are constantly updated. Therefore, an address that had 0% risk yesterday may have received or given an asset to a risky counterparty today. In that case, the risk assessment would change.
Application of KYC policy
Application of KYC (know your customer) policy. Mandatory identification of Users who are allowed to make transactions on our Service. To verify the User, the Administration has the right to request the following data: to take a photo ('selfies') with a citizen's identity document: a scan-copy of the front and back sides of an official ID card with a photo, i.e. a valid passport, driver's license or other national ID card; to confirm the place of residence: an official document issued within the last 3 months, with a clear indication of the name and address of the customer. This can be a utility bill (water, electricity or landline phone bill) or a bank statement. The copy must include: full name, full residential address, date of issue (within the last 3 months), name of the issuing authority with official logo or stamp; provide a copy of the front and back sides of the bank card and/or a photo of your bank card taken against the background of the main page of the Service (showcase with services). To ensure confidentiality and security, only the last 4 digits of your credit card should be visible. It is allowed to hide 3 digits on the back of the card (CVV code). The Administration of the vn-exchange service will take steps to confirm the authenticity of documents and information provided by Users. Identification information will also be verified with the help of secondary sources, and the Administration of the service reserves the right to continue investigating cases to obtain full confidence in the authenticity of the provided documentation. The Administration of the vn-exchange.com service reserves the right to monitor the User's data on an ongoing basis, especially in cases where their identification information has been changed or their activity seems suspicious (unusual for a particular User). In addition, the Administration reserves the right to ask Users for up-to-date documents, even if they have been authenticated in the past.