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What is KYC and AML? How to verify KYC successfully

  1. 1. What are KYC and AML?
  2. 2. What is KYC?
  3. 3. What is AML?
  4. 4. How are KYC and AML important?
  5. 5. Documents to prepare for successful KYC identity verification
  6. 6. Why it is necessary to verify KYC?
  7. 6.1 Avoiding Identity Theft
  8. 6.2 Financial Assistance to Terrorist Organizations
  9. 6.3 Financial Fraud
  10. 6.4 Money
  11. 7. How do we do KYC and AML?

What are KYC and AML? These are two essential concepts that players need to know if they want to participate in the financial markets. One question is how the government and financial institutions can know where Blockchain's money comes from. Do not worry! KYC and AML will help you control this. Check out the article below for more details!

1. What are KYC and AML?

KYC and AML are understood as the due diligence process of a company or organization to verify the identity of their customers.

This process ensures that the customer's money is in legal possession. In addition, KYC and AML also ensure that customers are not on the "Blacklist" list, such as criminals, corruption, terrorism, etc. In today's article, KYC and AML are mentioned in the field. Cryptocurrency

2. What is KYC?

Know Your Customer (KYC) is understood as knowing your customers or understanding customers. KYC process collects identifying information related to customers of certain services. Basic information is collected, including portrait, ID card, Passport, address, etc.

The primary purpose of KYC is to remove unqualified people from using a service. Each other will develop different standards in this regard.

For example: Exchange X only allows US citizens to register and trade, but exchange Y enable global citizens to use information so that the authorities can investigate or track wrong doing

3. What is AML?

AML (Anti Money Laundering) is understood as anti-money laundering. Money laundering is the practice of storing illegally earned money to make the proceeds “seem” legitimate. Anti-money laundering includes regulations put in place to prevent revenue generation import from illegal acts such as corruption, smuggling, drugs,...

Read more: What is KYC and AML? How to verify KYC successfully

4. How are KYC and AML important?

The importance of KYC and AML? Terrorists earned 1 million dollars after carrying out the bombing. Currently, he is a wanted person. If he wants to transfer money to someone else, he has to convert this money into Bitcoin.

To change USD into Bitcoin on the exchange, the criminal needs to perform KYC to verify the identity, and indeed that account will be disabled in the first place because it is on the Blacklist. Then, KYC and AML properly perform their role in preventing " dirty money."

5. Documents to prepare for successful KYC identity verification

How can users use KYC successfully. Below is a list of documents required to perform KYC listed:

  • Identity, identity card (ID card), or Passport (Passport).
  • Driving license.
  • Notarized residency documents are valid for 3 months. These documents must contain information about your address, whether utility bills, television bills, etc.
  • Present proof of personal income to ensure that you do not use "dirty money" for that ICO or exchange. (Depends on whether the ICO project/exchange requires it.)

ICO projects or exchanges will ask you to provide a photo or scan and submit it. Some notable projects may require users to "take a selfie" holding their ID card or Passport.

After submitting all the documents, their side will check the information by comparing the information you have registered with the submitted papers. A KYC identity verification cycle takes 1-2 days, depending on different projects and exchanges.

6. Why it is necessary to verify KYC?

KYC verification aims to confirm exactly where the funds are coming from and from whom. Governments of countries around the world have minimized illegal activities and protected stakeholders. Some of the reasons for requiring KYC verification are listed below.

6.1 Avoiding Identity Theft

KYC solves identity theft by providing valid proof to establish your legitimate identity. Banks and institutions using KYC prevent fake accounts by keeping accurate records of each invoice and ensuring only the right people can receive their services.

6.2 Financial Assistance to Terrorist Organizations

The United States government recognizes that many different people and agencies use the money generated in this country to finance terrorist organizations.

Therefore, the US government has begun to crack down on suspicious activities such as shell account transfers to prevent terrorist activities. KYC collects a list of accounts that help prevent currency exchange and track money being created and transferred.

Read more: What is FOMO and FUD syndrome? How to get over it?

6.3 Financial Fraud

KYC is also very helpful in fighting financial fraud. The most complex copy is that the perpetrator will set up an account using fake or stolen IDs. Next, they fill out a loan application. After the approval process, the perpetrator stole the funds raised from various versions.

This is the situation that makes KYC verification necessary. To curb illegal financial activities, the US government introduced the Bank Secrecy Act and the Patriot Act to end these activities.

6.4 Money

Laundering Money laundering is understood as illegally transferring money and turning it into legitimate sources of capital. Organized and unorganized criminal elements will use fake accounts in banks to store money.

This amount will be spread across different versions to avoid suspicion. The money is then transferred through illegal means to other countries and states for money laundering.

7. How do we do KYC and AML?

The US, Korea, UK, and the European Union have also integrated KYC and AML processes into their cryptosystems. These are the leading countries to apply and issue regulations for Blockchain and Cryptocurrency.

The governments of these countries have integrated KYC and AML into their cryptocurrency systems. Currently, Vietnam has not issued laws related to cryptocurrencies and Blockchain.

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Hopefully, this article has helped readers understand “what are KYC and AML?” in Cryptocurrency. These two processes may take a little longer to complete the identification steps. However, you will be trading and buying in the safer market. If you want to know more helpful information about Blockchain and Cryptocurrency market, visit the BHO Network website. Thank you for reading!

Published on February 18, 2022

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