Financial service providers such as crypto exchanges and trading platforms face significant pressure to fight illicit activities related to transfers of fiat currencies and digital assets. Enter Know Your Customer (KYC) and Anti-Money Laundering (AML). KYC and AML are regulatory requirements that safeguard customers\u2019 information and funds within exchanges, wallets, and service providers.When users create an account on any exchange, they need to complete KYC verification. It allows the platform to verify the customer\u2019s identity by collecting necessary information like official identification or bank statements.Following KYC regulations is a proactive measure. Financial service providers take customers\u2019 details beforehand to make sure the person is legitimate. Institutions do not allow customers to make financial transactions without meeting KYC requirements. Even if they enable users to create an account without KYC, they do not get full access to all the functions and benefits of the platform.Apart from customer identity verification, KYC combats fraudulent practices within the system, which provides several additional benefits:By establishing customers\u2019 identity and financial history, lenders can assess their risks, which leads to responsible lending and risk assessment.KYC fights identity theft and other financial fraudsAs KYC is a proactive measure, it minimizes the risk of money laundering.It increases the trust, security, and accountability of financial service providers.AML is a set of regulations designed to prevent the movement and laundering of illegal funds. AML measures target terrorist financing, tax fraud, and international smuggling.AML is closely associated with the Financial Action Task Force (FATF) to encourage international cooperation. AML regulations differ from country to country, but there is currently a global effort to align the standards.With the progressive technological developments in the financial sector, methods to launder illegal money have also evolved. The AML software recognizes patterns of suspicious behavior to prevent transfer of money for illicit practices such as terrorism.The\u2026<\/p>","protected":false},"excerpt":{"rendered":"
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