Research shows that 65% of major exchanges and wallets have ignored KYC processes. Conducted by P.A.ID strategies, an analyst and consultant company that aids in the business development and project delivery. Commissioned by Mitek, a provider of digital identity solutions. Together they have revealed that leading crypto exchanges and wallet providers across Europe and in the US have failed to conduct proper KYC verification processes.
The Identity Crisis Research
The research which is titled The Cryptocurrency Identity Crisis shows that about 65% of major exchanges companies do not conduct proper identification process for their users before giving them the ability to trade their various digital currencies.
These companies in question have failed to meet the minimum requirements for conducting identity checks for the various classes of individuals around the globe. Failure to perform this identification and screening processes can render these institutions useless in case of a crypto theft or another hacking activity.
KYC (Know Your Customer) is a process which involves identifying the users of a business. All businesses do it, but financial institutions and other monetary bodies have extended liability and responsibility. For them knowing the identity and information of their various clients is just the beginning. They also need to be able to verify their data before they can do business with them.
The point behind this process is to curb financial crime and money laundering activities.
The European Parliament on April 19, 2018, approved the fifth Anti-Money Laundry Directive, AMLD 5 and is to take effect in 2019.
This new directive will collaborate various crypto exchanges across Europe and the US together by making them provide customers’ bank accounts and a statement which will serve as the essential requirement for enrollment of the KYC process.
EU Directive will increase KYC compliance
Knowing the identities of customers before delving into any business transaction is vital, as this will put exchanges in a protected position. From safety, they can make better decisions regarding accepting a particular clients business. The directive from the EU will most likely supply the motivation needed for institutions to change and adapt.
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