What is KYC? Why is it Necessary?

What is KYC? Why is it Necessary?

When you register on a crypto platform like Tokenomy, there are several important steps to take in order to become an investor. One of these steps is an identity verification step called Know Your Customer (KYC).  KYC is a very important verification used in the finance industry. The implementation of KYC is something that must be done by financial institutions or investment platforms and has been regulated by the Financial Services Authority (OJK) in POJK No.23/POJK/01/2019. What are the benefits of KYC and why should it be done?

What is KYC?

Know Your Customer or KYC is a verification that must be performed by financial service institutions to ensure the authenticity of the customer’s identity and is used to monitor every transaction activity the customer carries out. This includes monitoring any suspicious transactions. KYC is implemented as a step to get to know customers better, including conducting background checks on customers’ identities such as transaction characters.

As technology develops, the KYC process can now be done digitally without the need to meet face-to-face. There are several things that customers can do to confirm their identity, such as including a selfie photo with their ID card or by making a video call. Currently, there are many financial and banking institutions that provide digital features to make it easier for their customers to carry out transactions. In the future, every registered financial technology company will have the opportunity to use the digital KYC system to carry out the identity verification process virtually.

Operationally, KYC is not as simple because it concerns customer’s privacy. To perform due diligence on the identity of the customer, the financial service provider must be able to collect all data and private information about the customer. This includes checking on the source of funds owned and this must be carried out without offending customers. Therefore, the KYC process is implemented carefully guided by a set of policies.

How does KYC Work?

KYC is implemented in the first step of registration on a financial platform. In the crypto-space, you usually do KYC when registering an account on a crypto investment platform like Tokenomy. Confirmation of identity is done by completing personal data and also sending selfie photos with ID cards. The KYC process itself sometimes varies, depending on the type of platform and also the financial technology used. Here are some commonly used KYC methods: 

  • Upload document ID, such as e-KTP.
  • Make an appointment with the platform authority directly.
  • Make video calls.
  • Check the authenticity of a customer’s source of income.

Benefits of KYC

In general, the function of KYC is to help a financial platform identify its customer profile.  KYC is necessary and has many benefits. Without KYC, there will be many opportunities for criminals or scammers to commit fraud and other criminal acts. Here are some of the benefits of KYC:

  • Prevention and eradication of money laundering that might be possibly used to  finance terrorism 
  • Ensure every customer is registered using their Single Identification Investor Number (SID Investor).
  • Secure transactions that make customer’s identity unusable by others.
  • Observing transactions to ensure that there is no suspicious transaction.

Tokenomy’s KYC Policy 

Tokenomy is owned by Tennet Technologies Inc. registered in Labuan, Malaysia. Tennet Technologies Inc. has obtained the approval to conduct financial intermediary service activities under the law of Labuan Financial Services and Security Act 2010 (LFFSA). Tokenomy has policies in place to protect users’ personal information by implementing Know Your Customer (KYC) and by complying with the Anti-Money Laundering and Prevention of Terrorism Financing (APU-PPT) regulations. With the implementation of KYC, Tokenomy ensures our users that your transactions will be kept safe. Remember to choose Tokenomy as your preferred crypto investment platform!

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