KYC (Know Your Customer) is a process used by financial institutions and other organizations in order to verify the identity of their customers. It is often used to prevent money laundering, identify theft, fraud and other illegal activities. The KYC process usually involves collecting personal information such as name, address and date of birth from customers. This information is then compared with existing databases to ensure accuracy.
The purpose of KYC is two-fold: firstly, it allows organisations to comply with anti-money laundering regulations; secondly, it helps them build trust between them and their clients. As such, many companies require customers to complete a KYC procedure before allowing them access or use their services.
In the context of cryptocurrencies like Bitcoin (BTC), Litecoin (LTC) or Ethereum (ETH), the need for a rigorous KYC procedure is even more important due to the anonymous nature of these digital assets. Exchanges are required by law in some countries to request identification documents from all users who wish to take part in cryptocurrency trading activities on their platform – this includes both buyers and sellers alike. Generally speaking, if you want access or use any service involving cryptocurrencies you will likely be subjecting yourself to some sort of KYC verification process beforehand.
Although slightly inconvenient at times, having stringent procedures around knowing your customer can help protect an exchange’s users against malicious activity while also helping maintain regulatory compliance across different jurisdictions – thus creating an environment where people feel safe when engaging in crypto transactions online without fear that they may be subjecting themselves unknowingly into something potentially fraudulent or illegal down the line!
