What Is KYC?
KYC, short for Know Your Customer or sometimes Know Your Client, is a legally required process that banks, bitcoin exchangesUnderstanding Bitcoin Exchanges Bitcoin has proven itself to be one of the fastest horses in the financial arena. To keep up with the rising demand, countless Bitcoin exchanges have popped..., and other financial institutions use to verify the identity of their customers. KYC is required by law in many countries in order to comply with anti-money laundering (AML) regulations.
KYC varies by jurisdiction but it involves collecting identifying information about customers, such as name, address, date of birth, national ID number verification, facial verification, document verification such as utility bills as proof of address, and even biometric verification. It can also include other information like income levels, employment history, and investment portfolios. It is used by financial institutions to screen customers for financial crime risk and to comply with financial surveillance requirements.
KYC has been criticized for being anti-privacy and for excluding some people from the financial system but it legally required by all regulated financial institutions such as bitcoin exchangesUnderstanding Bitcoin Exchanges Bitcoin has proven itself to be one of the fastest horses in the financial arena. To keep up with the rising demand, countless Bitcoin exchanges have popped... and even bitcoin ATMsWhat Is A Bitcoin ATM? A Bitcoin ATM is a physical terminal for exchanging government-issued currency (fiat) for Bitcoin. Some Bitcoin ATMs are capable of making two-way exchanges (buying and....
If you value your privacy and anonymity, it is important to consider these factors before using a Bitcoin exchangeUnderstanding Bitcoin Exchanges Bitcoin has proven itself to be one of the fastest horses in the financial arena. To keep up with the rising demand, countless Bitcoin exchanges have popped.... There are a few ways to buy Bitcoin without going through a KYC exchange, but they tend to require a better understanding of how bitcoin works and often come with a premium but is well worth it if you value your privacy.
Risks Of KYC
One of the biggest privacy concerns around KYC is the potential for personal data to be mishandled or stolen. In 2018, for example, the personal data of nearly 150 million people was exposed in a massive data breach at Equifax. This type of incident highlights the importance of ensuring that any personal data collected during the KYC process is properly secured.
Another risk associated with KYC is the possibility that hackers could target financial institutions in order to obtain access to customer data. In 2017, for example, hackers were able to steal more than $81 million from Bangladesh’s central bank by targeting the SWIFT payment system. By gaining access to customer data through a financial institution, hackers would be able to commit a wide variety of crimes, ranging from identity theft to fraud.