Why is KYC (Know Your Customer) Verification Necessary?
KYC (Know Your Customer) is a mandatory identity verification process used by banks, crypto exchanges, and financial institutions to prevent fraud, money laundering, and terrorist financing. Here’s why it’s essential:
Governments require financial platforms to verify users’ identities under AML/CFT (Counter-Terrorist Financing) regulations.
Examples:
FATF (Financial Action Task Force) guidelines.
EU’s AMLD5/6 (Anti-Money Laundering Directives).
U.S. Bank Secrecy Act (BSA) & Patriot Act.
Non-compliance risks fines or shutdowns (e.g., Binance’s $4.3B settlement with U.S. regulators).