For those interested in history, the KYC initiative dates back to 9/11, when America issued the Patriot Act – a federal law to prevent such attacks in the future.
Today KYC and AML compliance is a must for all regulated organizations which work with money. Indeed, it’s tough to find a financial procedure where you don’t have to show some form of ID.
The contradiction between mainstream finance and fintech is pretty evident; while cryptocurrency enthusiasts have been battling for anonymity, traditional banks and companies do their best to eliminate it. Well, I think it’s fair to admit now that the wide adoption of crypto is not happening without regulations and KYC. The reason for this is simple: anonymity can be dangerous on so many levels.
As we see from history, the main purpose of KYC is risk control. It prevents identity theft, weeds out dishonest contractors, and combats illegal activities – so governments can control crime better, companies are protected from legal risks, and their clients receive a more stable service. Moreover, in the light of crypto adoption, complying with AML and KYC shows the legitimacy of fintech startups, gives the green light to crypto-related operations, and protects user funds.
KYC Protects People – Despite its Drawbacks
To sum it all, it’s easiest to treat KYC in the same way as scanning at the airport. The procedure may seem tedious, but you – and other passengers – end up more protected.
There are two things to keep in mind so you get a better KYC experience. First, read the KYC requirements carefully, and provide only the requested documents in the required format. It will let you go through the verification faster. Second, choose the services that will keep your sensitive data safe. Check for the mentions of security certificates on the official website, or contact the support to tell you more about their safety policies.
How do you feel about KYC?