KYC/AML implementation – is it a positive trend in the blockchain project market?

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13 February 2020
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Know Your Customer

Financial security is one of the top priorities of any organization. Modern projects find a solution in customer identification by introducing KYC/AML procedures. On one hand, such measures partially ensure security, but on the other, they cause a conflict among users and regulators, revealing confidential information and violating anonymity.

IQeon explains why KYC/AML procedures are recommended and what peculiarities are associated with them.

What are KYC and AML procedures?

KYC procedure (Know Your Customer) is a range of measures taken by a company in order to obtain certain personal data about its customers who are carrying out transactions. In other words, the service identifies its user before conducting a transaction and making sure that it won’t be associated with increased risks: money laundering, terrorist financing or tax evasion. 

AML (Anti Money Laundering) is a set of measures aimed at preventing the legalization of income obtained illegally. AML is a series of procedures required to ensure the security of the company. 

Criticism regarding KYC/AML 

Some crypto enthusiasts feel negatively about such methods of verification considering data collection a direct defection of blockchain technology value. Users believe that KYC/AML procedures only help to connect particular senders with carried out transactions, breaking the logic of confidentiality and anonymity. 

Critics are convinced that these procedures inflict much more damage and induce users outflow despite the fact that anti money laundering is a multibillion industry. 

About the advantages of these procedures

KYC method of verification is a comparative newcomer in the blockchain sphere, but it’s already associated with the idea of a reliable and successful project. Following the procedure is an indicator that the platform works within international legal framework. The overall goal is to refuse providing services for suspicious anonymous accounts.

KYC and AML are valuable for company of any size. Moreover, verification requirements are common in every country despite the location: traditionally user should provide document of identification and proof of residence. 

So, popular trading platform Coinbase which work with more than 10 million users took the initiative. Coinbase requires its customers to provide personal information that identifies them and proves the absence of suspicious activity. Despite a kind of anonymity violation, many users choose this particular platform – partly because it provides the necessary safe space for transactions.

The introduction of KYC/AML is a truly positive trend for blockchain projects. The electronic money market is an industry with a turnover of billions of dollars, which makes it attractive not only to investors, but also to scammers. Therefore, it is in the interests of the project to establish an additional security level in order to protect its users and their digital assets from possible attacks by scammers. The implementation of these practices is a kind of global trend among those projects putting priority on users. IQeon, of course, is among such projects! – comments Denis Gavrilenko, CISO of the company.

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Thus, KYC/AML procedures take minimum of time and effort, but bring maximum of positive aspects. Such verification on the platform provides:

  • Additional security for clients, as procedures increase the reliability of the project and its team;
  • Protection of the project reputation and confirmation that the platform operates in the legal field;
  • Users’ assets security;
  • Project compliance with the main international trends of fighting against criminal activity.

It is obvious that the introduction of KYC/AML is not obligatory for the platform, however, this procedure will help to distinguish a reliable site from a fraudulent one, which makes its implementation a clearly positive trend.

IQeon team has already begun implementing KYC/AML on the platform.


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