Why is KYC compliance essential for the cryptocurrency industry and how XanPool's automated KYC process facilitates a smooth onboarding.
The surge of digitization of payments from FinTech companies and cryptocurrency platforms has led to ensuring compliance through Know Your Customer (KYC) and Anti-Money Laundering (AML).
In this article, we explore what is KYC and AML compliance, their importance in the cryptocurrency industry, and also how XanPool enables automated KYC compliance to ensure a smooth onboarding process for its users.
Cryptocurrency platforms and service providers play a major role in the whole market of cryptocurrency. These platforms are used for facilitating buying, selling, and trading of cryptocurrency tokens, storage of digital assets, or any other services. A lack of any proper systems in place has led to platforms allowing users to sign up without providing any identity proof. However, this led to several incidents along with usage of digital currencies for wrong reasons like illicit activities.
The Significant of KYC Compliance in the Cryptocurrency Industry
The crypto industry is booming right now. From major corporations to governments across the globe are keen on exploring this next-gen financial ecosystem. Despite its growing popularity, there are some roadblocks that the industry continues to face. One of which has been the crypto being used for anti-money laundering, illicit activities, and even terrorism.
A lack of legal regulations pertaining to digital assets has resulted in limited consumer protection. Due to this, cryptocurrency exchanges and service providers have been targeted by a number of attackers for stealing funds and thefts. The regulators, as well as service providers, are inclined towards an increase in consumer protection. Moreover, as the industry is rapidly maturing with people and corporations entering the space, the demand to comply with such laws is now more than ever.
Furthermore, such laws are meant to provide consumer protection and stop the usage of crypto for illicit activities. As crypto exchanges and service providers act as one of the gateways to entering the crypto industry, regulations of KYC and AML are all the more important, for these platforms as well as for their users.
What is Know Your Customer (KYC)?
KYC stands for Know Your Customer. It refers to obtaining identification proof of customers or users. This includes driver’s license, government-issued identification, bank accounts, residential proof, utility bill, to name a few. The process consists of the following: identity verification, due diligence, and ongoing monitoring. These processes make an organization AML compliant and also give protection against bad actors.
The procedure or rules for KYC differs according to different jurisdictions. The main purpose of KYC is to ensure consumer protection and that unqualified people do not get authorization. KYC also provides information in case of any criminal activities on the exchange platform.
What is Anti-Money Laundering (AML)?
The cryptocurrency platform provides a certain level of anonymity and privacy to users. This makes it a favorable option to use while dealing with illegal activities.
AML stands for Anti-Money Laundering. It refers to a set of laws meant to ensure the prevention of funding through illegal or illicit activities. These activities include tax invasion, using funds to buy illegal goods and services, etc. The regulatory framework in AML ensures that cryptocurrencies are not used for carrying out any such activities. Our current financial ecosystem has a number of AML checks in place.
This research suggests that the cost of KYC compliance costs banks EUR 50 million a year. The cumbersome process of onboarding customers for KYC compliance is one of the primary factors behind this staggering loss. Customers often abandon this process because of the extensive process.
KYC process takes too long but with the use of innovative solutions, we can solve this issue. XanPool, which facilitates a crypto-payment gateway, enables an automated KYC procedure so as to make the process of onboarding customers as smooth as possible. Moreover, with proper checks in place it protects its customers and secures its platform from fraud actors.
The several features of XanPool are available for users and businesses that pass the KYC procedure. It’s an essential part of the due diligence procedure that safeguards against the company engaging in money laundering and customer risks. Hence, to bring a user-friendly process of onboarding, XanPool automates its KYC procedure that further allows us to provide an engaging services to our users.
How Does XanPool Automate KYC Compliance?
After you sign up on the XanPool platform, you will be required to verify your account in order to start accessing its different services.
Step 1: Add your Address
Add your complete address in the box.
Step 2: Verify your phone number
Add your phone number in the space and click on verify. Verify your number by adding the code sent on your phone.
Step 3: Upload ID Proof
In the next step, upload any of your identity documents like driver’s license, national card, or passport. Make sure that you upload both the sides of your ID card.
Step 4: Upload Address Proof
Upload a document such as utility bill or bank statement which also has your name on it. Please note that your address, name, and details are clearly visible in the photograph.
Step 5: Upload your Video
In the final step, you will be asked to upload a video of yourself. You will be asked to slowly move your face, move your ID card (the one you uploaded) closer to the camera and hold it for 3 seconds, and a handwritten note as shown in the demo.
Once all your steps are completed click on ‘Submit’. The process of verifying your identity for KYC compliance on XanPool is easy, fast, and protects you against any illicit activities. Moreover, our automated system has resulted in higher customer satisfaction, a secure and full-proof system, and user retention.