What is Know Your Customer – KYC?

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What is Know your Customer – KYC?

Due to the increase in regulation of Bitcoin and other cryptocurrencies, financial institutions and exchanges need to comply with financial legislation. This includes following policies to prevent money laundering. 

Money laundering is generally the attempt to conceal the nature, location, source, ownership or control of money. Exchanges need to be mindful of the fact that there will be customers who want to cash in cryptocurrencies obtained unlawfully.

Exchanges will ask their users to follow a verification process when they create a new account. The same verification process also happens when you apply for a new bank account or credit card. In this case you have to deal with Customer Due Diligence – CDD and Know Your Customer – KYC.

Why do I need to do KYC?

Know Your Customer is part of a policy of institutions and organizations that want to know exactly who they are doing business with. There are two sides to these regulations. On the one hand, there is the protection of customers by preventing market manipulators. On the other, the prevention of financial offences such as fraud, swindling, money laundering by malicious users of the exchange. 

In practice this means that parties will ask you for personal data before they can provide certain services, such as trading or depositing and withdrawing money.

What are the different levels of Know your Customer – KYC?

For example, you can easily buy Bitcoin and cryptocurrency for a small amount, but for larger amounts exchanges and institutions will want to verify your identity,. For huge (6-7 figures) amounts, you can can be questioned about the source of your funds. Most exchanges will ask for further information, do not be concerned. If you have nothing to hide you will have a smooth onboarding process.

What exchanges do not have Know your Customer – KYC? 

There are some exchanges that are still flexible with full know your customers procedures. Below are shown three exchanges that do not enforce KYC for crypto deposits.

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