KYC

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KYC. Know Your Customer

Know Your Customer is a process of client identity confirmation. KYC refers to insurances required legitimization test of certain new customers to prevent money laundering.

KYC in Cryptocurrency[edit]

When users start using a Bitcoin exchange, a Bitcoin ATM, or even an Initial Coin Offering (ICO), they must meet the KYC requirements, e.g.

  • Full name;
  • Home address;
  • Citizenship;
  • Date of Birth;
  • Photo of the official ID card (driver's license, passport);
  • Social security number or tax number;
  • statement of account
  • electricity bill;
  • Photo of the bank card (if necessary for financing)

This process is important to unknowingly facilitate the users of money laundering, terrorism, and corrupt acts. This will verify the identity.

Customer identification process requires credentials and relevant information required for verification. However, the actual process differs in the exchange. Each one can vary in the queried IDs, the form will be signed and the procedures carried out.

What is KYC?

Legacy in EU[edit]

The key basis for the KYC requirement of European financial companies is Article 8 of the 3rd EU Anti-Money Laundering Directive. In combination with the UK Bribery Act, the UK Modern Slavery Act or the Financial Action Task Force (FATF), it provides the framework for know-your-customer activities. The international regulations themselves are relevant for companies that are not themselves in the affected countries but maintain these economic relationships.

Many exchanges around the world have received modest to rigorous announcements to comply with the KYC laws, as legislation was finally agreed in the industry in the first half of 2018. KYC stands before any user can act, whether in volume or not.

Critics[edit]

Although the merits of the fight against identity theft and money laundering are clear, the way governments act is wrong. In the current situation, companies with inadequate security infrastructures need to collect countless personal information.

Many cryptocurrencies have not included this process. Unlike most of the 20 largest cryptocurrencies, Cardano has made regulation one of its main features. But the company needs to provide users with adequate security.

See Also on BitcoinWiki[edit]

Ressources[edit]