If you’ve ever used a cryptocurrency exchange or bought an NFT, it’s likely that you will have had to perform a know-your-customer (KYC) check to verify your identity. KYC checks are a key part of the global financial system’s infrastructure, and enable cryptocurrency businesses to remain compliant with anti-money laundering (AML) regulations.

For states and regulators, KYC requirements are a vital tool in preventing crypto being used for crimes such as human trafficking, money laundering and terrorist financing.

For many cryptocurrency advocates, however, the idea of centralized entities having oversight of crypto transactions goes against the founding principles of the space.

One thing’s clear: KYC and AML policies are a part of the global financial system that is not going away any time soon, and cryptocurrency exchanges are no exception.

What are KYC and AML, and why do they exist?

Know-your-customer (KYC) procedures identify and confirm that a customer is who they say they are. It’s a multi-step process designed to prevent fraudulent account creation and use.

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Author: Jason Nelson

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