With the increase in daily user rate, crypto exchanges are planning to implement the KYC and AML verification procedures to curb crimes.
The phenomenal blockchain business allows consumers to quickly purchase tokens from the internet, such as Bitcoin & Ethereum. Many users need to buy the Altcoins in a crypto exchange. Economic criminals take place in the global blockchain industry and are prone to a large variety of criminal activity. Cryptocurrency’s vast network encapsulates illegal practices, cash-laundering, and extremist financing.
About $2 trillion, was laundered from the loss of $1.4–3.5 trillion annually in global financial fraud.
It has established by global regulatory authorities and has also tightened the controls of crypto exchanges. Banks conduct Due Diligence Procedures, and now Crypto firms are getting into it.
KYC in Crypto exchanges:
With the increase of activity in the Crypto market, there is a need to recognize and efficiently resolve the loopholes. Cryptocurrencies have also been in the hysteria of controversies and a center of illegal activity. The KYC specifications have also modified to cover crypto exchanges. For exchanges to work in a frictionless manner, they need to check the identity of each customer. Customers have to submit and verify their identity when the KYC procedure implements.
The KYC verification implements Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD). It helps the firm to know the user of their services. There are platforms such as the-crypto-investor.com through which users can invest in crypto and even sell them for profits. Implementing KYC allows to company to know its users who are using their resources and guarantees their protection. It will prevent the risk of fraud and online crime.
Crypto Market even has the feature of P2P transactions, which means users can trade within themselves. KYC verification helps the exchange platform and the users to trust the buyer or seller. A platform that has the KYC feature is automatically secure and attracts users for the trust and security of services.
AML client monitoring is against revised conviction reports, sanction reports, PEP documents, and regional watch lists. With this, money laundering by some organizations is curbed. This method can be used for real applications optimally.
Crypto Market under Regulatory system:
Crypto Market has already recognized the need for a Regulatory system. Hackers robbed around $32 Million from BITpoint exchange wallets. Recently on May 7, around 7,074 Bitcoins worth $40 Million were hacked from the popular crypto exchange Binance.
Following this, the CEO and founder, Changpeng Zhao, stated,
Even though the Crypto market is cashless, hackers find their way to do illegal things and security is much needed here. KYC and AML verifications will reduce fraudulent activity in Crypto exchanges.