KYC is one of the most controversial subjects in today’s crypto world. The number of ICOs requiring KYC verification is growing day by day. For this reason, it’s essential to have a clear understanding of this procedure. In this article, we’ll take a closer look at KYC/AML regulations so that you don’t feel like you’re in uncharted waters anymore.
KYC stands for “Know Your Customer”. It’s the process of identity verification of the customer. Each backer is supposed to pass the KYC procedure and provide their credentials in order to participate in the ICO. This is a necessary measure to ensure that the ICO projects are doing business with legitimate entities.
How KYC works? The procedure is simple: a backer needs to send a scan copy of their passport (ID or driver’s license for the US citizens) and make a selfie (holding the document in their hands). This allows to avoid a fake identity or using a duplicate account. Sometimes, the confirmation of residency or other documents may be required.
The term AML (anti-money laundering) refers to a set of policies, laws and regulations aimed at combating generating income in a fraudulent way. This concept is broader than KYC. Let’s picture the following scenario: if an ICO project has a strong KYC during the token generating event – it’s a sign of legitimacy for banks. It means that such project won’t find it difficult working with banks and following AML regulations. There’s a direct link between these two procedures.