When you first hear about “KYC” — or Know Your Customer in its longer form — you may not immediately know what it is or realize how it might affect you. Allow us to say, that KYC is one of the most important keys to reducing suspicious activity and fighting against bad actors on crypto exchange platforms. Here’s why.

Monopoly board

What is KYC?

KYC stands for Know Your Customer, and refers to the process of verifying the identity and transaction pattern of a business’ customers. The verification process is usually done before or during the time that the customers start doing business with a company.

KYC is very popular among financial services companies such as banking institutions, credit companies, and insurance agencies — and for good reason! These companies deal with large amounts of funds and thus have an immense job to make sure their customers are legitimate and not involved with corruption, bribery, or money laundering.

Why was KYC introduced?

Following the terrorist attacks against the U.S. on September 11, 2001, the Patriot Act was quickly put in place and introduced as a means to deter and punish terrorist behavior, as well as to strengthen money laundering prevention.

As bad actors tend to engage in money-laundering and terrorist financing using anonymously opened accounts, KYC laws were introduced as part of the Act to deter terrorist behaviors.

Emergency Exit

It costs a company large sums of money to comply with ever-stricter regulations, but as we all like to say, it’s better to be safe than sorry. You’d rather invest in experienced compliance professionals and high-tech KYC softwares than get fined for failing to do so. Beware, the fines are steep — JPMorgan Chase was fined more than $2 billion due to failure to report suspicious activity in 2014!

How does KYC work on Paxful?

We are proud to say that Paxful is one of the first peer-to-peer crypto companies that implemented a full Anti-Money Laundering (“AML”) program that includes ID and proof of address verification.

Driving License

Among many KYC providers, we chose an extremely established and secure provider that uses artificial intelligence with machine learning and human quality assurance to detect any fraudulent documentation. For example, when a new user submits a selfie and photo of their ID, our KYC provider will use 3D biometrics to ensure that the selfie matches the actual ID that has been submitted. And it doesn’t matter where that user is; Paxful verifies customers from every corner of the world and across various types of devices.

What does it mean for your trading experience? 

You may think that requiring vendors to verify their ID would reduce trading volumes on a crypto exchange — but it did exactly the opposite for us. With KYC in place, Paxful users now have the option to trade only with those that have successfully completed ID verification on our system. This means that monetary transactions are much more legitimate and transparent

Man in red sweatshirt

Many bad actors who used to scam and steal money anonymously from our honest users fail to provide appropriate ID verification, and are left with only one option: to flee. Thanks to that, our honest users can now trade confidently with much lower levels of risk

KYC is a comprehensive check of a user’s background. When you sign up for Paxful, we use our KYC system to verify the validity of your name, selfie, ID, and your address. You can easily see if a vendor is verified on their user profile. Doing so greatly establishes credibility for our customers, and makes it easy for you to identify which vendors are trustworthy to transact with. 

Everything is done for your safety

At Paxful, our compliance team works around the clock across multiple global offices to keep the bad guys out and reduce our platform’s exposure to risk. Controls on the KYC policy on Paxful are constantly getting stricter, which means more work for us, but more safety for you!

Paxful’s KYC process is extremely streamlined. Follow our easy instructions and you’ll complete the intuitive process in just a few moments. Once completed, you can gain a lot more loyal customers for being honest and credible!

If you haven’t already, sign in to your account on Paxful.com and select “Verify me”  from the drop-down list when you click on your username in the top right corner!