What is KYC and AML? How to check the latest KYC from 13/10/2022
Cryptocurrency is currently one of the most talked about topics in the financial sector. And of course, KYC and AML are terms you will definitely see and hear often when participating in the cryptocurrency market or investing in ICOs. Since 2017, many governments around the world have developed regulations for the crypto market sector. And most of those efforts revolve around enforcing identity verification (KYC) and anti-money laundering (AML) regulations. So what are KYC and AML? Let’s find out the most useful information about Bitcoin Vietnam News in this article.
What is money laundering and how does it work?
There are many different meanings, the most common of which is “laundering” the word “dirty money” – money from bad activities, criminal activities such as human trafficking, drug trafficking, terrorist financing, corruption. … in “own currency”, that is, in the common currency generally accepted in the financial system.
Money laundering is the practice of disguised illegally obtained money so that the source of the money obtained appears legitimate. We follow strict laws to help us, or our employees or agents, understand that it is illegal to engage in, or knowingly engage in, money laundering activity. Our anti-money laundering policy enhances investor protection, secure payment processing and security services for our customers.
The source is objects that collect and have “dirty money”.
Step 1: Put “dirty” money into the financial (investment) system.
Stage 2: Transformation, Overlay: Sending money through various transactions and financial instruments that make the money appear “legitimate” or come from an official source.
Step 3: Integration: Money is returned to the financial system when the “laundry” can now be used normally.
KYC and AML are due diligence processes by companies or organizations to verify the identity of their customers. The goal is to ensure that the money that the customer wants to deposit is in legal possession. At the same time, it also ensures customers are not blacklisted such as terrorism, crime, corruption,…
These terms are mainly used by the banking world. As part of today’s article, I will mention KYC and AML in the cryptocurrency space.
What is KYC?
KYC (Know Your Customer) stands for verify your customer. This is the first step of customer due diligence in the AML process. When a new user wants to register on the exchange, a KYC procedure is carried out to accurately identify the customer. This allows the exchange to assess the level of risk clients are taking as a result of their suspicious financial activity.
KYC includes 2 main processes:
- Collection of personally identifiable information (PII) through identification documents issued by the government to citizens.
- Verify customers by reporting Politically Exposed Persons (PEP) and those with criminal records.
What is AML?
AML (Anti Money Laundering) – Anti Money Laundering, is a set of legal procedures and regulations that aim to identify and prevent profits from illegal activities. The reason is because nowadays cryptocurrency transactions are still seen as “tasty bait” that financial criminals are happy to swallow. They exploit the anonymity of cryptocurrencies to carry out illicit activities like trading in illegal goods, tax evasion, etc. Here they can use technology to launder money and erase criminal tracks. These practices are further facilitated by cryptocurrency betting sites, money laundering crypto mixers (such as Coinmixer, DarkLaunder, and Chipmixer), and cryptocurrency exchanges.
Therefore, to prevent this crime from spreading all over the world, the authorities are forcing the exchanges to verify their customers. They should also flag and report suspicious customers and transactions.
Why fight money laundering?
In other words, we are against bad people who give crime funds to continue doing bad things like terrorism, bombing our children’s schools, destroying hospitals, spreading fear and creating chaos. social unrest. Money laundering itself is illegal.
From a state and economic perspective, “dirty money”, if accepted, will increase criminal activity and corruption, distort economic indicators (because it doesn’t actually create value), and attract more negative resources.
From the point of view of banks, financial groups and large corporations, this is an important prerequisite for international integration because:
- FIs/financial institutions that want to play with big players must comply. It’s like a virus that nobody wants to catch. So when it comes to international payments, trade finance or transactions, no one wants to be held accountable by someone who doesn’t have tight control over their silver.
- Strict international legal regulations, especially hard currency, compel the entities involved to comply. If they don’t comply, they will be severely punished, otherwise they will always end up on the blacklist, no one wants to play with them anymore.
- It is the exclusion of bad actors that reduces the risk of doing business globally.
Meaning of KYC and AML
KYC is the most important factor in online trading platforms, especially in virtual currency trading. In addition, KYC also creates a database of information that law enforcement agencies can use in their investigations of certain criminal activities in the future.
Imagine a terrorist making only $1 million in cash after bombing Afghanistan. He wants to send $200,000 to his girlfriend, who sells guns in Africa. Of course, these two subjects were extremists, they were wanted and their bank accounts frozen. He thought of a way to convert that $1 million into bitcoins to transfer. Blockchain is anonymous and no one knows who you are in this transaction.
But in reality, it’s not that simple.
In order to convert USD to Bitcoin on the exchange, he needs to do KYC to verify his identity and ensure his account is blocked from the start for being blacklisted. And backend transactions are not possible anymore.
Currently, KYC and AML are playing their own role in preventing “dirty money” from being passed on to “bad guys.”
Using the examples above, you should already understand the importance of KYC and AML.
How to successfully verify KYC
Have you ever had a case where you did identity verification for an exchange but couldn’t register because KYC failed? Below I list the documents required to do KYC with the highest probability of success:
- ID card/passport
- Include your full name, if necessary, the name matches your ID card/passport
- Notarized documents valid in the last 3 months such as electricity and water bills, internet etc.
- State your current income (according to project requirements)
All documents will be scanned, photographed, and ready to upload when requested. And include a photo of the front and back of the ID card as well as a selfie photo with the ID card with the complete date of the verification request. Once all the required documents have been submitted, they will verify the information by comparing the information you previously registered with the information in the submitted documents.
This KYC identity verification process usually takes 1-2 working days. They also require different documents and validation times depending on the ICO project or other exchange.
For KYC and AML, we need time to complete the identity verification steps. But in return we can trade and buy in a safer environment. After the article “What is KYC and AML? How to successfully verify KYC” we hope you have a better understanding of KYC and AML in this cryptocurrency space.
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