Sign up for The Paypers newsletter Follow The Paypers on LinkedIn Follow The Paypers on Twitter Follow The Paypers on Facebook
The Paypers, paypers, Insight in payments, News, Reports, Events
 advertisement
Cryptocurrencies

Majority of EU and US crypto exchanges and wallets fail to conduct proper KYC

Tuesday 5 June 2018 | 02:47 PM CET

Analyst house P.A.ID Strategies has released its research into the onboarding practices of cryptocurrency wallets and exchanges. 

The research, commissioned by Mitek, a provider of digital identity verification solutions, looked into whether prominent cryptocurrency exchanges and wallets across Europe and the US are using Know Your Customer (KYC) checks when on boarding customers.

The research, “The Cryptocurrency Identity Crisis” shows that of 25 prominent custodian wallets and crypto exchanges examined, 68% are allowing users to trade crypto and fiat currency with no formal identification and no Know Your Customer (KYC) checks. 

The EU’s fifth anti money laundering directive, AMLD5, will bring these platforms into line with other financial products such as bank accounts, demanding that checks are carried out on new customers to affirm their identity.

The recent surge in ICOs and the volatile price of bitcoin has made the crypto markets an attractive place for both legal and not-so-legal trading activity. 

However, for the 68% of exchanges and wallets that do not meet upcoming regulation, there are no identity verification checks against official identity documents, against Politically Exposed Persons lists or sanctions screening, and no audit trail that would help to trace criminal activity. 

As well as failing to meet upcoming compliance demands, this could lead to irreparable harm to the reputation of these platforms if they are used to launder money.

The research ranks wallets and exchanges according to how compliant the onboarding process is, with AMLD5 due to come into force in 2018, plus the speed and simplicity with which a customer can sign up and get started. 

 advertisement
 advertisement
 advertisement
 advertisement