Glossary
KYC (Know Your Customer)
KYC (Know Your Customer) is the identity check that regulated crypto platforms must carry out before serving a client: name, date of birth, address, ID document and sometimes source of funds. It is a core part of anti-money laundering (AML) rules.
Also called Know Your Customer, Identity verification, KYC/AML, Customer due diligence
See also
KYC, for Know Your Customer, is the process by which a financial company verifies who its clients are. In crypto, regulated platforms such as a centralized exchange, a broker or a custodial wallet must run KYC before letting you deposit, trade or withdraw. It is part of the wider anti-money laundering and counter-terrorist financing rules, known as AML/CFT.
How KYC works
When you open an account, the platform typically asks for:
- your full name, date of birth and address;
- a photo of an identity document and a selfie or short video to match your face;
- sometimes proof of address, your tax residence and, for large amounts, the source of your funds.
Specialized providers check the documents automatically against databases and sanctions lists. The platform then monitors transactions and must report suspicious activity to the authorities.
The rules behind KYC
The global standard comes from the Financial Action Task Force (FATF), which extended its recommendations to virtual asset service providers in 2019. They include the travel rule: the sending and receiving providers must exchange information on the sender and the recipient of a transfer, with a threshold of USD/EUR 1,000 in the FATF standard.
- United States: FinCEN guidance of May 2019 confirmed that crypto businesses acting as money transmitters fall under the Bank Secrecy Act, and that the funds travel rule can apply to transfers of $3,000 or more.
- European Union: since 30 December 2024, Regulation (EU) 2023/1113 makes crypto-asset service providers attach sender and recipient data to crypto transfers, and check that a self-hosted address belongs to the client when a transfer to or from it exceeds EUR 1,000. These rules apply alongside MiCA.
A simple example
You sign up on an exchange and send $1,500 of bitcoin to a friend’s account at another exchange. Before the transfer goes through, your exchange sends your name and account details to the receiving platform, which checks them. If you withdraw to your own hardware wallet instead, the platform may ask you to prove you control that address, for example by signing a message.
Why it matters
KYC makes it harder to launder stolen or criminal funds through regulated platforms and is a condition for exchanges to obtain licences. For users, it also helps recover accounts and supports tax reporting. Read our guide on how to choose a crypto exchange.
Risks and limits
- Your personal data is stored by the platform and its providers; data leaks have happened in the industry.
- Phishing sites imitate KYC pages to steal ID documents. Only upload documents inside the official app.
- KYC does not protect your funds if the exchange fails; it is not a deposit guarantee.