What is KYC?

If you opened an account on a cryptocurrency exchange, you likely have to complete a KYC verification. KYC requires financial service providers to collect information that verifies the identity of their clients. This could be through official identification or bank statements, for example. Just like AML regulations, KYC policies help combat money laundering, terrorist financing, fraud, and the illegal transfer of funds.

KYC is usually a proactive approach rather than a reactive one. Most financial service providers collect customer details during the onboarding process, before they can make financial transactions. In some cases, accounts can be created without KYC, but they are limited in functionality. Binance, for example, allows users to open an account but restricts trading until KYC is completed.

When filling out KYC, you may be asked to provide:

Government ID, General Registry

Driver's license

Passport

In addition to verifying the customer's identity, it is also important to confirm their location and address. Your identification documents will provide basic information such as your name and date of birth, but more is needed to establish your tax residency, for instance. You may need to complete more than one step of KYC. Financial service providers often also need to re-verify the identity of their clients at regular intervals.