KYC is an acronym for “Know Your Customer” and refers to the mandatory process of verifying a customer’s personal information, typically conducted by a financial institution. During this procedure, documents confirming the customer’s identity, such as a valid identification document, utility bills with a home address, social security number, and others, are required.
Typically, customers are required to provide KYC information during the account registration process and sometimes when there are changes in their data. For example, if you officially change your name a few months after registering your account, you would need to provide new information for the KYC process.
How does the standard KYC process work?
The main stages of the procedure include data collection and verification, comprehensive customer checks, and ongoing monitoring.
Let’s highlight the three main stages:
- Customer Identification Program
This is the first and primary stage of the KYC process. It involves collecting and verifying information about the customers.
2. Comprehensive Customer Checks:
Sometimes, after the initial verification, a company may decide to conduct additional checks on a customer’s background. The purpose is to assess the risk. If a customer has been involved in financial fraud or has been under investigation in the past, this information will become known during the background check.
3. Ongoing Monitoring:
Ongoing monitoring ensures the currency of verified data and allows the system to carefully analyze suspicious transactions. Depending on the investigation results, an exchange may temporarily suspend an account and report the issue to regulatory and law enforcement agencies.
Why is KYC mandatory on a launchpad?
The completion of the KYC procedure on the EXBI launchpad is mandatory for several reasons:
- Compliance with regulatory requirements: Many jurisdictions in different countries require KYC to prevent financial fraud, money laundering, and terrorist financing. Launchpads, as part of the cryptocurrency industry, also need to adhere to these requirements.
- Security and trust: KYC helps verify the identity of participants and their financial identities, creating a secure and trustworthy environment for all involved. Conducting KYC on a launchpad can help identify potential scammers and prevent potential criminal activities.
- Investor protection: Through KYC, launchpads can create lists of verified investors, facilitating a more fair and controlled token distribution.
- Overall, the completion of KYC on a launchpad is mandatory to comply with regulations, ensure security and trust, and protect the interests of investors. It helps establish a transparent environment for conducting token sales.
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