Why KYC and AML are Necessary for the Crypto Market
KYC and AML are essential processes for every crypto exchange. Governments and financial regulators are tightening their vigilance of crypto exchanges and platforms to ensure anti-money laundering (AML) and know-your-customer (KYC) procedures are in place. Even self-regulatory bodies like CryptoUK have been formed in the last few years, with the aim of creating specific regulatory guidelines concerning crypto trading. The crypto community is willing to become an equal part of the world economy; both KYC and AML processes are required to achieve this.
What is KYC?
An acronym for Know Your Customer, KYC comprises a series of customer identification steps to establish beneficial ownership of accounts in the exchanges` platforms. This process is implemented and standardised by top-tier financial companies all over the world to ensure the identity of the asset holders. This is a necessary step to guarantee the protection of the clients` funds and to identify the source of those funds. A potential customer has to submit specific documents that help the institution to establish proof of identity, registered e-mail address and phone numbers, address verification or principal place of business, professional status, nature of income and criminal background, if any.
What is AML?
AML stands for anti-money laundering; a term frequently used by financial entities to describe the laws that allow them to perceive and report threats of money-laundering activities. There are still plenty of the crypto exchanges granting customer anonymity. This means that there is no way to identify the nature of the income, which may be illegal and the amount of such transactions is unlimited because of the blockchain technology features. Know Your Customer and Anti-Money Laundering is used to avoid precisely this type of criminal activity.
Central banks of different countries have established rules regarding this. Such laws have been developed to counter financial terrorism. According to the latest news, EU agreed on the chain of requirements, which pushes all of the exchanges to implement both the KYC and AML procedures and obtain the proper regulation licenses.
Why These Procedures are Essential for the Crypto Market
KYC and AML are the first and the main steps to protect you while you are using any exchange`s features. Allowing the institution to know more about you is the best way to achieve full access to its protection systems and be sure that you are meeting all of the compliant procedures. KYC/AML regulations involve releasing the private information to governmental authorities but not with an intention to violate a user’s privacy. Instead, it provides the entire industry credibility, making it appealing for investors who are still sceptical about investing in crypto. Moreover, with new investors getting involved in trading, more liquidity and stability will follow.
The IronX Exchange, a result of the collaboration between IronFX Group and EmurgoHK, has become fully regulated crypto exchange, with adequate KYC and AML procedures, implemented through the integration of third-parties and by in-house procedures. The exchange aims to create an environment in which traders will find it easy to start crypto trading and in turn, enhance market liquidity.
