The 2020 Guide to AML and KYC for Crypto Exchanges & Wallets

Introduction

Money laundering is a huge problem worldwide. Unfortunately, while cryptocurrency means cheaper, faster international transactions, it also makes the crypto sector ripe for criminal activity, such as money laundering and terrorist funding.

To stay ahead of this, regulatory bodies are installing staunch anti-money laundering (AML) legislation. This helps to prevent money laundering through cryptocurrency exchanges and custodian services.

Strong AML programs include foolproof KYC processes to identify and verify users. With this, authorities hope to root out suspicious activity in the crypto sector.

However, for crypto exchanges and wallets, this also means more expensive onboarding, peppered with friction, and can be vulnerable to data breaches. Unscalable manual KYC processes simply aren’t going to cut it in a world where regulation is increasing at an alarming rate.

Thankfully, GetID has designed the ideal KYC tool. GetID’s omnichannel identity verification solution automates KYC, for more cost-effective, fully compliant, faster onboarding. Cut out the friction with GetID now.

What Do AML and KYC Mean to Crypto Exchanges?

As the structure of the financial industry evolves, cryptocurrency is reenvisioning the way that transactions take place. At the same time, virtual currency has swooped in to offer new solutions for international monetary exchange.

But this comes with its own set of challenges. A central issue is that criminals launder their money through anonymous cryptocurrency exchanges.

Regulations aimed at halting the global wave of money laundering are tightening. The Fifth Anti-money Laundering Directive (AMLD5) in Europe and FinCEN’s Final Rule in the USA make it clear that virtual currencies and the exchanges on which they trade are subject to anti-money laundering legislation.

This means a solid AML program that helps identify and protect against suspicious activity needs to be in place to protect against financial crime and money laundering.

At this time, crypto exchanges are not up to scratch with their AML policies. A recent study by Coinfirm showed that 69% of the 216 crypto exchanges do not have “complete and transparent ” know-your-customer (KYC) procedures in place — An integral part of a robust AML program.

Continue reading: https://getid.ee/the-2020-guide-to-aml-and-kyc-for-crypto-exchanges-wallets/