KYC and AML procedures — inevitable for compliant STOs

The extensive growth of the STOs and the way they are offer their security tokens has had tremendous impact on the development of Know Your Customer checks over internet based platforms.

Up to date, Anti-money laundering (AML) and Know-your-customer (KYC) procedures, policies and checks are critical in conducting a sound offering.

But what is their main function? What are the differences between KYC and AML? And why are they so crucial for a compliant STO?

What does KYC mean?

Simply put, Know-Your-Customer, or just KYC in short, is all about demonstrating that the company has performed Due Diligence on subject it’s entering into relationship with. Thus, it can be described as the process of verifying an investor’s identity. In this sense, every one wanting to buy tokens is required to provide credentials such as an ID or passport in order to get access.

What is does AML represent?

AML (Anti-money laundering) is a broader term that stands for a set of regulations and measures used by financial institutions, governments and other institutions to anticipate, manage the risk and monitor clients in their daily operations. There are many aspects of the processes that need to be implemented to prevent unlawful activities, such as money laundering, terrorism financing, tax evasion, market manipulation, and others.

Is there a difference between KYC and AML?

Positive. Even though the line between KYC and AML processes is often blurry and many people tend to use them as synonyms this would be entirely incorrect.

To commence, the main goal of KYC is to guarantee that everyone associated with a business transaction is known person to the company, while AML processes are focused on detecting suspicious activities which arise from customers using the financial system.

Why KYC and AML are crucial for a compliant STO?

As by the merely use of the terminology Security Token Offering prescribes that the tokens which are up for offer are securities. This means that the token will have the characteristics of a financial instrument. Hence, due to the reason that financial instrument fall within the categories of regulations that entail sound customer identification the procedures of KYC and AML are triggered. What’s important is that these procedures have the potential to revolutionize the way STOs are being traded in the crypto sphere and change the whole concept of staying anonymous on the blockchain.

More precisely, by complying to KYC and AML regulations, the Security Token Offerings are able to adhere to the requirements that many regulatory authorities have been urging the crypto industry to adjust to. Thus, the digital assets have the opportunities to regain the trust of both the investors as well as the state organizations.

Individuals or entities wishing to invest in Blueshare — the first Hybrid STO providing traditional and tokenized shares, can undergo our KYC process.This will give them exposure to a Company with 23 years of profitable track record and a chance to participate in an the dividend distribution from a precious metals mining opportunity.