In 2022, losses in the cryptocurrency sphere amounted to $4 billion as a result of financial scams and hacker attacks. In 2023, the total amount of losses decreased by half, but the intrigues of fraudsters still keep crypto industry participants busy.
Business analyst Roman Tereshchenko says that to counter these threats, companies (including those operating in the cryptosphere) must implement effective strategies to minimize risks and combat financial crime. One key tactic is the application of KYC (Know Your Customer) procedures as part of AML (anti-money laundering) compliance.
The Role of KYC in the Cryptocurrency Sector - Roman Tereshchenko
Fintech organizations use the KYC process to verify the identity of customers before opening an account. As Roman Tereshchenko reports, this measure is aimed at combating fraud, money laundering and money laundering. In addition, KYC helps companies comply with generally accepted anti-money laundering (AML) standards.
According to a business analyst, KYC can be described as a screening of a potential client's financial background. Such a thorough check is a prerequisite for granting access to cryptocurrency exchanges and
Роман Терещенко біографія wallets.
Roman Tereshchenko names such basic components of the KYC procedure:
Confirmation of the authenticity of the user's personal information. At this stage, key data about the person, such as name, surname, patronymic, date of birth,
Роман Терещенко біографія place of residence and unique identification code, is clarified, similar to compiling a biography. Companies verify that the data in the documents presented by the client matches the information from official sources.
Client risk assessment - analyzing potential risks, checking the client for involvement in fraud. The business analyst notes that the analysis includes checking for inclusion in the list of politically exposed persons (PEP), persons with special status (SIP/SIE), and presence on terrorist lists. Past financial transactions, credit and location of the customer are also investigated. For legal entity clients,
Роман Терещенко біографія additional analysis is performed on the biographies of key business participants and their financial statements.
In-depth client verification. If potential risks are identified during the initial assessment, the process of more detailed examination of the client's financial background is activated. This stage involves the collection of additional documents, analysis of the sources of origin of finances and enhanced control over transactions.
Continuous monitoring. Companies also perform continuous monitoring of their clients to track any suspicious changes in their activity.
- This stage involves analyzing new business connections, changes in management, media and other external factors that may affect the client's risk profile," says Roman Tereshchenko.
Sanctions and termination of work: risks of violating AML/KYC requirements in the field of cryptocurrencies - Roman Tereshchenko
Non-compliance with AML/KYC requirements can cause serious damage to cryptocurrency companies. It entails financial losses and forced termination of operations.
By 2023, fines in the crypto industry amounted to nearly $6 billion due to insufficient compliance with AML measures. Roman Tereshchenko insists: that AML/KYC compliance are necessary procedures for the stability and legality of operations in the crypto industry.
Ignoring these regulations can lead to the spread of fraud, significant financial penalties, and complete shutdown of companies. Thus, implementing effective KYC/AML programs remains imperative to maintaining trust in cryptocurrency companies' backgrounds and adhering to security in such a popular digital economy.