KYC and AML in Crypto: What Businesses Need to Know
Who has to run KYC and AML checks in crypto, what FinCEN and OFAC expect, how the Travel Rule works, and what a merchant accepting crypto actually needs to do.
FinTech
What is Know Your Customer?
Quick answer
The process financial and other regulated businesses use to verify customers' identities and assess risks such as fraud or money laundering.
Know Your Customer, explained
Know your customer (KYC) rules require banks, payment apps, crypto exchanges, and many other financial services to confirm who their customers are before or soon after opening an account. Typical steps include collecting a name, address, and date of birth, checking an official ID document, and sometimes verifying a selfie against the ID photo.
KYC is part of broader anti-money laundering and counter-terrorist financing regulations. Higher-risk customers may face enhanced due diligence and ongoing monitoring. Digital KYC, often called eKYC, uses document scanning, biometrics, and database checks to onboard customers in minutes rather than requiring a branch visit. Balancing thorough checks with a smooth user experience and strong data protection is a constant challenge for FinTech companies.
Related terms
Banking as a Service
A model, known as BaaS, in which licensed banks provide their infrastructure through APIs so other companies can offer financial products.
BiometricsThe measurement of unique physical or behavioral traits, such as fingerprints or facial features, to identify or authenticate people.
FinTechFinancial technology: software and services that improve or automate financial services such as payments, lending, and investing.
NeobankA bank or banking service that operates entirely online through apps, without traditional physical branches.
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