KYC and AML procedures: importance, methods, and a guide
If you’ve ever created an account on a cryptocurrency exchange, chances are you’ve had to comply with KYC and AML procedures. Some find this irritating, even though these verification checks are essential. This is because they allow tracking who is responsible for a particular transaction to stop criminal activity.
What does KYC do?
KYC stands for Know Your Customer. By KYC, we mean the process by which an organization or company verifies who it is dealing with.
These days, many websites and applications require identity verification. It is also required, for example, when participating in some allocation projects on MDAO Maker, but fear not — it is a simple and safe process.
MDAO Maker partners with Ondato and AMLbot to pass KYC and AML verification.
Ondato provides technology solutions such as digital identity verification, business client customization, data verification, authentication, etc. They provide the highest standard of online or offline KYC registration for businesses in the crypto industry, managed through a single interface. Ondato turns compliance into a business advantage for its customers, helping to create a better and safer environment for organizations and individuals.
In addition, our MDAO Telegram Wallet bot offers verification through AMLBot, an online assessment service for crypto assets and transactions founded in 2019 by the RegTech team in accordance with FATF (Financial Crimes Task Force International) guidelines.
What is the difference between KYC and AML?
AML stands for Anti-Money Laundering and is used together with KYC. The two terms have much in common because KYC is part of AML.
AML means all the processes, rules, etc., used to combat money laundering. So KYC is one of the various components of anti-money laundering.
Why is identity verification necessary?
There are several reasons why verifying users’ identities is crucial. In most cases, it is mandated by governments or, for example, Central Banks.
A solid “Know Your Customer” policy is important for several reasons:
- To avoid doing business with parties who misuse services to launder money, commit fraud, or finance terrorist activities.
- Terrorist attacks are almost always funded by black money, so combating them is very important for international security.
- By ensuring your users are thoroughly investigated, you can combat the risks of integrity violations and reputational damage.
- Companies need the trust of their users, and you can only gain that trust if you comply with the laws and regulations yourself.
When users are not identified, criminals who want to launder, cheat, evade taxes or finance terrorism are given a free hand. This is because no organization monitors what they spend their money on. The account from which the money is sent is not tied to an individual, so these organizations don’t know who is actually sending the funds.
How do KYC and AML procedures take place?
Each company handles the KYC and AML processes differently. In almost every case, the user’s identity must be established. The user will have to leave personal information such as name, address and contact information. Identity must also be established by sending an identification document, such as a driver’s license or passport, along with the application.
Some places ask several questions. For example, you may be asked where the money you intend to use comes from and what you want to use the application for.
The KYC and AML process on MDAO Maker is quick and easy, and all you have to do is provide a photograph of your face and ID. Once you do this, you can join allocations that require such verification on our platform without any problems.
Please read our detailed article on how to get verified for the allocation community round using the Tatsumeeko project as an example.
Is my data safe?
Great if you’re asking questions about the security and privacy of your data. After all, you have to provide sensitive data to a company that you may not yet know very well.
That’s why it’s important to always research how the company protects customer data. After all, exploring the security of an application or organization is never a bad idea.
Ondato’s data servers and information infrastructure are protected with 24/7 monitoring. We should note that Ondato is governed by an international standard (ISO/IEC 27001:2013).
ISO/IEC 27001:2013 is a standard that defines security management best practices. The foundation of this certification is the development and implementation of a rigorous security program, which includes the design and implementation of an Information Security Management System (ISMS). It defines how Ondato consistently manages security in a holistic, comprehensive manner. This widely recognized international security standard defines that Ondato:
- Systematically assesses information security risks based on the impact of threats and vulnerabilities.
- Develops and implements a comprehensive set of information security controls and other forms of risk management to address customer and architectural security risks.
- Has a comprehensive governance process to ensure that information security controls meet our needs and those of our customers on an ongoing basis.
Ondato operates in multiple jurisdictions and complies with local laws and regulations. Privacy and security are closely intertwined in the design of Ondato solutions, and principles and aspects of secure design are defined and integrated into the company’s design processes.
The General Data Protection Regulation (GDPR) is a directive developed by EU law that sets guidelines for collecting and processing information. Ondato follows GDPR to protect your integrity.
Ondato’s services are used by corporations such as SIXT, smeBANK, Swedbank, SEB, kevin, and Moment Credit.
The AMLbot algorithm constantly improves and analyzes more than 10 thousand open sources and more than 2.5 thousand spam addresses in real-time. Checking wallets for illicit funds protects users and businesses from unwittingly committing financial crimes.
AMLbot is certified by the European Institute of Management and Finance, and more than 500 companies have used AMLBot in the past three years.
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This article was intended as a short guide into KYC and AML checks. We’ve discussed the essential parts of both, and explained why these procedures are often crucial to ensure a secure interaction between projects and their users.
These days, many websites and applications require identity verification. It is also required, for example, when participating in some allocation projects on MDAO Maker, which you now know is a simple and safe process.
MDAO Maker partners with Ondato and AMLbot to pass KYC and AML verifications.
