@ChrissCrypto 1 February 2021 edited more from that month

What are the Benefits of KYC ?

Let's start with a short summary of the terms:  ***KYC******: Know Your Customer*** https://en.wikipedia.org/wiki/Know_your_customer ***AML******: Anti-Money Laundering*** https://www.investopedia.com/terms/a/aml.asp ***FATF: Financial Action Task Force***  https://www.fatf-gafi.org/ ***GDPR: General Data Protection Regulation*** https://gdpr-info.eu/   Here are some interesting dates: **1989**: The world's largest countries met **in Paris (France)** at the **G7 Summit** to create the '**FATF: Financial Action Task Force**' - ('*GAFI: Groupe d'Action FInancière sur le blanchiment des capitaux*' in French). **In the 1990s**, it was the **FATF that gave birth to the KYC and AML**, following the explosion in money laundering volumes between the 1990s and 2000, but also following numerous abuses in the financial sectors during the same period. **Following the attacks of September 11**, **2001**, **the FAFT expanded its field of action to include the fight against the financing of terrorism**.   Originally **KYC** and **AML** were (and still are) used in financial sectors such as :  ***Banking***  ***and Insurance*** There is one essential point to be addressed before moving on to Cryptocurrencies. It is necessary to make the distinction in KYC & AML! Because they are not the same methods of identity verification, and they are not intended for the same people: **KYC**: ***is a*** *(basic)* ***process of verifying the identity of the customer***, *whether it is for Banks, Exchanges (online), or Financial Institutions, this regulation is the same for all. When we speak of 'basic customer identity verification process' this means:*  https://en.wikipedia.org/wiki/Know_your_customer ***Providing proof of identity*** *(ID Card, Driver's License, Passport)* ***Proof of Domiciliation*** *(mainly for Banks and Financial Institutions)* ***Provide a Selfie***, *to verify that the person completing the KYC is the rights holder of the 'account'. - Which we can consider as an 'eKYC' via Digital Biometric Verification*. **AML**: ***has a much broader scope***, *and is intended* ***more for organizations managing cash flows and includes even more controls:*** https://www.investopedia.com/terms/a/aml.asp ***Customer Due Diligence (CDD)***: *Assessment of the customer's risk profile, according to the KYC provided.* ***Enhanced Due Diligence (EDD)***: *A more advanced procedure (KYC) for high-risk clients (risk of money laundering, or terrorist financing)* ***Ultimate Beneficial Owner (UBO)***  ***Politically Exposed Person (PEP)*** In short, as you will have understood, **there is a complete arsenal to control all financial drifts**. In this article, we will focus on KYC, because it is this kind of control that is required of you (unless you have bad intentions).   **Since 2017**, **KYC** (and wrongful and abusive use of the word AML) **are applied in the world of Cryptocurrencies**. It is during this year in particular, **when people invested massively in this financial sector** (although this wave of fundraising began in 2016), that **the Regulatory Authorities decided to take an interest in where this money was coming from**, but more importantly, what it was going to be used for. At the very beginning (in 2017), **KYC were imposed on ICO** (**Initial Coin Offering**) operations, when **95% of them failed**, or even worse, **were fabricated scams**. It was above all ***to keep an eye on the billions of dollars that were coming in from all over the place and most often ended up disappearing***. https://www.investopedia.com/terms/i/initial-coin-offering-ico.asp

**That's when it was necessary to regulate all this.** Today we see this word everywhere. **But do you know what it's really used for?** Of course, if you listen to the 'Crypto-Anarchists' you won't understand anything: "***The Blockchain and Cryptocurrencies are part of a fundamental right which is anonymity.***" - **To legitimize the buying and selling of Cryptocurrencies anonymously**. *They are right*, *they WERE right!* But in just a few years things have changed, and as **Sam BLACKMORE**, **CEO of the Bitcoin Vimba investment platform** said: "***The truth is that exchanges need a pragmatic approach to enable Bitcoin (BTC) to realize its full adoption potential. Therefore I cannot conceive of a future in which exchanges would not implement KYC procedures in order to survive***". **Many people still associate this new form of Currency**, but especially Bitcoin (BTC), **with scams**. This makes a bad advertisement for the Crypto industry, whose message is mainly conveyed by the press. As a result, people are becoming more and more reluctant, **which considerably slows down the mass adoption of Cryptos**.   **Since the Cryptocurrency has gone into 'mass market' mode and has become an investment asset.** **KYC** are not there as a constraint, but they **are there to ensure your protection and financial security!** The large majority of the sites/exchanges that impose you a KYC are not able to explain to you the advantages of this procedure, and due to this lack of information, we do not trust this system. **The main objective of the Financial Regulators is to protect you**, the customers of these sites/exchanges, as consumers of the financial services offered to you, against:  ***Massive Fraud*** ***Hacking of exchanges*** ***Pump & Dump ...***   It is true that the collection of your personal data (Identity, Address, Selfie ..) goes through **centralized KYC services**, but these **services also have the obligation to secure your personal and private information**, **within the framework of KYC and GDPR!** The KYC must be:  ***Secured*** ***Forgery-proof*** ***And completely traceable*** It is also your duty to **do your own research on the KYC system used/proposed** by the site you are interested in.

**Imagine this small case**:  *You are a customer of an exchange*, ***you invest*** *a little on various Cryptocurrencies*, ***a new customer appears on the platform***, ***and injects 10 Millions*** *(coming from illegal traffic or for the financing of terrorism), which will undeniably* ***provoke a Pump*** *of certain Cryptos*.  *You feel lucky*, ***you invest a little bit more***, *thinking that the price is going to go up again*, *because you may have missed an important announcement or a major innovation*, *which makes people want to invest*, *and in a few minutes*, ***the market collapses 'Dump' because the 10 Millions of 'dirty' money are 'laundered' and become 'legal' money***, *which can be easily withdrawn, so what happens? The market panics*, *everyone wants to liquidate and limit the breakage and losses*, ***but in any case***, ***you undeniably lose money***.   **That's how KYC protects you!** Against this kind of dubious practices, which in addition to laundering money (and potentially financing terrorism) make you, as a small investor, lose a lot of money. **The Blockchain is decentralized, but for it to be truly useful, it must be able to interact with traditional systems.**   Did you also know that nowadays, **it has become impossible to open a bank account anonymously!** When you deposit funds on an Exchange, or a site that offers financial services in the world of Cryptocurrencies, **would you be reassured to know that these sites are empowered**, **and above all**, are able to protect your funds?! So why not reduce the number of sites on which you are registered and which impose a KYC, to be limited to 2 or 3 (the most reliable according to you) and **complete a KYC as it should be for your own security** (just as you would do in a Traditional Bank).   See you soon **Christophe WILHELM** **Bitcoin Meister** https://bitcoinmeister.eu/ **© Bitcoin Meister**   Resources https://bitcoinmeister.eu/ https://www.fatf-gafi.org/ https://gdpr-info.eu/