What is KYC?
KYC is an abbreviation of “Know Your Customer”. It is a system in which the company confirms the identity of the customer, the actual party, and the purpose of the transaction so that the accounts of the ICO participants are not used in illegal activities such as money laundering and terrorist fundraising.
The original purpose of KYC is to prevent criminal from using financial institutions for money laundering purpose. Today, most ICOs are implementing KYC in addition to financial institutions.
Before investing, ICO companies collect the identity information of the account and verifies that it is legitimately acquired, and is not included in the list of internationally sanctioned persons belonging to criminals, terrorists, or any other corruptions.
So, why is KYC important?
As interest in ICO grows day by day, there is a growing need for regulations by government agencies around the world. As the laws are still unclear so far, such a move by regulators in many countries raises uncertainty about ICO companies and investors.
Meanwhile, KYC compliance are a universal concept widely adopted in the global financial industry. Voluntary compliance with KYC regulations provides several benefits for ICO companies and investors.
The followings are examples of KYC compliance:
- KYC compliance allows ICO companies and investors to be legitimized by regulators and banks.
- Projects that do not comply with KYC due to virtual currency transactions have started to be excluded from the market, such as de-listing from exchanges.
- Voluntary KYC compliance allows ICO companies to raise funds across a wider area.
- ICO company can make strategic decisions about fundraising activities through KYC.
ARGOS
“Create a world where good people transact safely and keep the bad people out.”
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