What is KYC? The latest 2021 KYC verification guide

What is KYC? – KYC (Know Your Customer) is the process of verifying the identities of members to help the system comply with the anti-money laundering law (AML) and protect the system from illegal acts. How to successfully verify KYC

What is money laundering and how do I launder money?

There are many different definitions, basically it is “washing” the word “dirty money” – money from bad activities, criminal acts such as human trafficking, drug trafficking, terrorism financing, corruption. … To “clean money” which means money that is commonly accepted in the financial system.

Money laundering is the act of hiding money earned illegally, so that the source of money looks legitimate. We comply with strict laws that enable us or any of our employees or agents to understand that participating in or knowingly participating in any money laundering related activity is illegal. Our anti-money laundering policies help strengthen investor protections, secure payment processes, and security services for customers.

The origin is the object that will collect and have the source of “dirty money”.

• Step 1: Put “dirty” money into the financial system (Placement).
• Step 2: Transforming (Layering): sending money through different transactions and financial instruments makes money look “legal” or comes from the official source.
• Step 3: Integration, integration (Integration): money is brought back into the financial system, once “washed” can now be used normally.

What is KYC?

What is KYC? – KYC stands for Know Your Customer – Know your customers or Understand your customers. This is the process of collecting identifying information related to the customer of a certain service. The basic information commonly collected is portrait photo, ID card number, Passport, address …

The purpose of the KYC process is to eliminate those who are ineligible from using a service. For each different unit, these standards can be different.

For example, exchange A only allows US citizens to register and trade on it. Floor B allows use by global citizens. At this point, exchanges A and B only need to filter the nationality of each user based on the collected KYC information.

Based on the database that the KYC process collects, the authorities can investigate or track misconduct.

What is AML?

AML (Anti Money Laundering) – Anti-money laundering. AML includes a series of regulations that are implemented to prevent income generated through illegal transactions: illegal trading, cross-border money laundering, tax evasion, cryptocurrency market manipulation … Thanks into AML metrics they will know who you are, what you are doing and stop your illegal behavior.

For example, AML regulations require credit institutions or allow customers to open accounts to complete due diligence procedures to ensure they do not support money laundering activities. The responsibility for performing these procedures is on organizations, not on crime or the government.

Why must fight money laundering?

To put it simply, I am against bad guys giving money from criminals to continue doing bad things, like terrorizing, bombing my child’s school, destroying hospitals, spreading fear and making trouble. social disorder. Money laundering itself is illegal.

From the national perspective, the economy, if “dirty money” is accepted, it will increase criminal activities, corruption, distort economic indicators (because it really does not create value). and attracting more and more negative sources.

From the perspective of banks, financial groups, large companies, this is an important condition for international integration, because:

• FIs / Financial institutions that want to play with the big guys must comply. It’s like a virus that no one wants to infect, so when doing international payments, trade finance, or transactions, no one wants to be held accountable for anyone who doesn’t have tight control over his money.
• Strict international legal regulations, especially strong currencies, force participating units to comply. If they do not comply, they either penalize heavily, or else they are blacklisted, no one wants to play with me anymore.
• It is the elimination of bad actors that will reduce the risk of doing business internationally.

The importance of KYC and AML

KYC is the foremost factor in online trading platforms, especially cryptocurrency trading. In addition, KYC also creates an information database that law enforcement agencies can use in their investigations in the case of some future criminal activity.

Imagine, that a terrorist just made $ 1 million in cash after a bomb attack in Afghanistan. He wants to transfer 200k USD to his girlfriend who is selling weapons in Africa. Of course these two subjects are extremists, they are wanted and their bank accounts frozen. He thought of a way to convert this $ 1 million into Bitcoin to move. Blockchain is anonymous and no one knows who he is in these transactions.

However, the reality is not so simple.

To exchange USD into Bitcoin on the exchange, he needs to perform KYC identity verification and make sure his account will be Banned from the beginning because it is in the Blacklist. And the transactions behind will no longer be possible.

At this time, KYC and AML play their role in preventing “dirty money” from giving “bad people”.

Through the above example, you must have understood the importance of KYC and AML.

How to successfully verify KYC

Have you ever come across an instance of performing an identity verification for an exchange, but registering forever is not due to a failure of KYC. Below I will list the necessary documents to perform KYC with the highest probability of success.

How to successfully verify KYC: 

• Identity Card / Passport
• Provide Full Name as required in ID / Passport
• Authentication papers are valid within the last 3 months such as utility bills, internet, etc …
• Report your current income (depends on project requirements)

All documents are scanned, take photos of them and be prepared to upload photos upon request. And including the front, back of the ID card and the selfie with the ID card showing the date of verification request. After you have submitted all required documents, they will check the information by comparing the information that you have registered before with the information on the document just submitted.

How to verify KYC This KYC identity verification process usually takes 1-2 working days. Depending on the ICO project or different exchanges, they will also require different documents and validation time.

Epilogue

With KYC and AML, it will take us a little more time to go through the steps of identity verification. But in return we will be traded, bought and sold in a safer environment. After the article “What is KYC and AML? How to verify KYC successfully ”hopes you have a better view of KYC and AML in this cryptocurrency field.

KYC and AML are the due diligence processes of a company or organization to verify the identity of their customers. The purpose is to ensure that the money a customer wants to deposit is in their legal possession. At the same time, it also ensures that customers are not on the “Blacklist” blacklist such as terrorism, crime, corruption, ..

These terms are often used a lot by banks. In the framework of today’s article, I will mention what is KYC? and what is AML? in the field of Cryptocurrency.

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