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What is AML and KYC?

Let us start with AML and KYC compliance. First of all, virtually any cryptocurrency exchange in the world cannot properly operate without implementing these procedures.

Every owner and holder of cryptocurrency has to face AML and KYC procedures when working with exchanges. No major cryptocurrency exchange in the world can exist without AML and KYC compliance now.
Let us get all this straightened out.
First of all, AML or Anti-Money Laundering refers to a set of special measures and rules intended for combating money laundering, terrorist financing, and administration of other financial crimes.

Interestingly, the AML term was finally approved after the creation of the Financial Action Task Force on Money Laundering (FATF) in 1989.

The process of AML compliance is based on the thorough collection of information about suspicious transactions and adverse customer behavior. Suspicious transactions can be detected by using a detailed analysis of all available information.

KYC or Know Your Customer

Refers to a specific set of rules, which make the process of customers' identity verification obligatory for all financial institutions.
Precisely because of these rules you simply cannot start working on centralized exchanges without verifying your identity.

The following information has to be requested within the KYC compliance:

Without having the basic set of information about their customers, no financial institution can legally operate in the modern world.
  • Full name
  • Phone number
  • Date of birth
  • Country and full residential address
  • Email address
  • Identity Card (passport, driver's license, and other documents)

Readability is Primarily the Concern of a Designer

It is worth noting that KYC compliance is one of the fundamental procedures that is included in the wide range of AML rules.

At the same time, AML compliance is a process that consists of analyzing a wide range of customer information. Interestingly, KYC compliance is part of AML compliance that allows getting general information about customers.
So, let us take a look at it one more time. For all practical purposes, KYC compliance is an identity verification process, while AML compliance is a set of specific methods intended to prevent money laundering.

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