Expanding Crypto Ventures with Aid from KYC Service Providers
In the rapidly evolving world of cryptocurrency, expanding businesses must tread carefully to ensure compliance with local regulations. This is especially true when venturing into new markets, where understanding the nuances of the regulatory landscape is crucial.
Leading KYC (Know Your Customer) providers are stepping up to the challenge, adapting their services to accommodate diverse regulatory demands and market specifics. By implementing flexible, jurisdiction-tailored compliance frameworks, these providers address each region's unique legal requirements and market conditions.
For instance, in the U.S., crypto exchanges must register with FinCEN, perform OFAC checks, collect full identity information, and comply with the Travel Rule for transfers over $3,000. In contrast, the EU applies a unified MiCA framework requiring licensing across all member states, verification of identity and address, enhanced due diligence, and transaction monitoring under GDPR privacy protections. South Korea mandates real-name verification linked to bank accounts, registration with the Financial Services Commission, and enhanced scrutiny for certain transfer types, while Brazil imposes prescriptive KYC/KYB rules with mandatory periodic re-verifications and up-to-date customer records.
To cater to these varying needs, KYC providers customise their procedures, ensuring compatibility with regional documents and local laws. They also employ dynamic onboarding and compliance workflows that adjust rapidly to evolving local laws, supported by automated system updates and proactive change management.
In addition, these providers engage local legal and compliance experts to interpret evolving rules and implement robust due diligence, including beneficial ownership checks and transaction risk assessments. They also offer real-time regulatory monitoring and communication, keeping businesses informed about changes and supporting them in migration if regulatory environments shift unfavourably.
Moreover, KYC providers like Sumsub maintain in-house compliance specialists to assist clients on all things compliance and continuously improve their automated solution to suit particular use cases. Sumsub's KYC solution can help achieve up to 98% pass rate, enabling businesses to create custom customer journeys based on different parameters, such as the user's country or risk profile.
When choosing a KYC provider, the key criteria should be their awareness of regulatory requirements in different countries and their ability to account for the specific AML/CFT obligations of particular clients. Proper KYC providers also use adaptable optical character recognition (OCR) to handle non-standardized documents and non-Latin scripts. Crypto businesses should ensure that their KYC provider's OCR solution can recognise atypical documents and read non-Latin alphabets, converting them into a computer-readable format.
A flexible verification solution is essential for crypto businesses to account for specific market characteristics, such as language and slow internet. For instance, Sumsub has created a special feature to adapt to the number-matching issue with driver's licenses in Turkey.
Crypto companies are required to implement KYC solutions as part of their Customer Due Diligence (CDD) procedures due to increasing AML regulations. These solutions help businesses comply with local regulations, adapt to different types of required documents, and maintain high pass rates. Requesting additional data and documents, conducting a liveness check, or setting transaction limits can help minimise the risks of money laundering and other illegal activities.
In conclusion, as the crypto market expands globally, KYC providers are playing a crucial role in ensuring compliance with local regulations. By offering customised solutions that cater to diverse regulatory demands and market specifics, these providers are facilitating market entry and ongoing compliance for crypto businesses expanding internationally.
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