Know your customer (KYC) - what is it and what is it for?

Know Your Customer (KYC) is a method of verifying customers in financial institutions before starting cooperation.

Despite the fact that the cryptocurrency financial system is positioned on the basis of absolute confidentiality and anonymity of each client, some financial organizations, for example, cryptocurrency exchanges, still conduct client verification in accordance with the generally accepted global KYC standard. It involves checking the client’s data, collecting information about him, on the basis of which certain financial services will be provided.

What data do I need to provide to complete KYC?

Typically, information about the system user is requested at the stage of creating an account or verifying it before using various options on the platform. Standard set includes:

  • TIN;
  • registration address;
  • phone number;
  • E-mail address.

In some cases, representatives of the organization may request a bank account or card statement to confirm the authenticity of the specified data.

At the first stage, a basic data check is carried out, the results of which confirm the basic data. The next step involves a broader review so that company representatives can identify past violations of the law by the client. After receiving this information, a decision is made to open access to services or limit functionality or refuse interaction.

The third stage is continuous monitoring. By regularly updating client data and tracking transactions, the company either continues cooperation or suspends the agreement.

What is KYC verification intended for?

The main purpose of checking customer data is to comply with current legislation in different countries. All of them are aimed at preventing money laundering through the cryptocurrency market, terrorist financing or tax evasion.