What are KYC and AML? How to make KYC successful?

By F | Experience

Are you wondering, "How can the government and financial institutions know where the money is coming into the Cryptocurrency and where the money goes?"

KYC and AML are the things that can help them manage this problem.
So what are KYC and AML?

Let's find out this issue in our article today!

KYC / AML is the evaluation process of a company or organization to verify the identity of their customers.

The purpose to ensure that the amount of money the customer wants to deposit is their legal possession. Also make sure customers are not on the "Blacklist" blacklist such as terrorism, crime, corruption, ...

These terms are often used by banks. In the context of today's article, I will mention KYC and AML in the field Cryptocurrency.

What is KYC?

KYC stands for Know Your Customer - know your customers or understand your customers. This is the process of collecting personally identifiable information about customers of a service. The basic information that is usually collected is a portrait, identity card number, Passport, address, ...

The purpose of the KYC process is to eliminate unqualified people from using a service. For each different unit, these standards may vary.

For example: Transaction A only allows US citizens to register and trade on this. Floor B again allows global citizens to use. At this time, floors A and B only need to filter the nationality of each user based on KYC information collected.

Based on the database collected by the KYC process, authorities may investigate or track misconduct.

What is AML?

AML stands for Anti Money Laundering - anti money laundering.

Let's talk about money laundering first. Money laundering is the act of hiding money earned illegally, making the money collection "look" legal.

So anti-money laundering is the regulation made to prevent generating income from illegal acts such as corruption, smuggling, drugs, ...

Importance of KYC & AML

Imagine, that a terrorist has just earned 1 million dollars in cash after a bombing in Afghanistan. He wants to transfer 200k USD to her girlfriend who is trading weapons in Africa.

Of course these two objects are extremists, they are wanted and the bank account is blocked. He figured out a way to convert this $ 2 million into Bitcoin to transfer it, an anonymous blockchain, and no one knew who he was in these transactions.

So everything is as simple as that for him?

Is $ 1 million earned from murder, transferred to arms dealers to continue to cause further deaths for others?

The answer is IS NOT. Things are not so simple.

To convert USD to Bitcoin On the floor, he needs to perform KYC to verify his identity and make sure his account will be Banned from the beginning because it is in the Blacklist. And the following transactions will no longer be possible.

At this moment KYC, AML fulfill their role in preventing "dirty money" from giving to "bad people".

Another example: Project ICO just want to focus on issuing tokens targeting some key markets. They can rely on the information during the KYC process to choose their right markets.

So with KYC and AML, we can fully know and control who is allowed to buy, sell and trade in this cryptocurrency market?

In fact, terrorists or ICO buyers can "bypass the law" in some form, such as asking someone else to do KYC, which is entirely possible.

However, it's undeniable that KYC and AML have helped us a lot in ensuring that the money flows in Cryptocurrency is legal.

So how do we - normal users implement KYC, AML?

What documents are needed to verify a successful KYC identity?

Have you ever encountered the case of an identity verification for an ICO project or an exchange registration but registration failed because KYC failed?

Below, I will list the documents needed to conduct KYC:

  • Identity card (ID) or Passport (Passport)

  • Driver's license (many projects allow to use the driving license instead of the passport or ID card)

  • Proof of residence of the brothers is valid within 3 months. They can be utility bills, TV bills, etc. as long as they have your address.

  • Income declaration. That is, ask you to show documents to prove where your income comes from. This is to ensure that you do not use "dirty money" for the ICO or exchange. (Depending on the ICO project / exchange required or not)

With the above documents, ICO projects or exchanges often require us to provide photos or scans and submit them. Some projects also require users to "take a selfie" with ID or Passport.

After you have submitted all required documents, they will check the information by comparing the information you have previously registered with the information on the document just submitted.

This KYC identity verification process usually takes 1-2 business days. Depending on different ICO projects or exchanges, they will also require different documents and authentication times.

You can also learn more about the KYC identity verification process that Coin98 guides in the article about the exchanges.

How are we doing KYC and AML?

The United States, South Korea, the United Kingdom and the European Union have also integrated the KYC and AML processes into their cryptocurrency systems. They are the leading countries in applying and promulgating laws and regulations for Blockchain and Cryptocurrency.

And in Vietnam?

Vietnam has no laws related to cryptocurrencies in particular and Blockchain in general. One of the reasons that the law has not been enacted is the legal issue.

I believe that the government as well as the authorities are interested in this field. And KYC, AML are the first things built for Vietnam to enact official laws for Blockchain as well as Cryptocurrency.


With KYC and AML, we will take a bit more time to perform the identity verification steps. But in return we will be trading, trading in a safer environment. ICO projects will also be more precisely targeted to their target market.

After the article What are KYC and AML? How to make KYC successful? Hope you guys have a better view of KYC and AML in this field of cryptocurrencies.

In your opinion, is KYC / AML really effective in practice? Do you mind having to keep KYC before trading on or trading ICOs?

Please share and exchange your views in the comments below! Thank you for watching the article.

Sincerely see you in the next article.

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