Anti-money laundering procedures are becoming essential in the world of crypto. Even when the community opinions on KYC verification are very diverse, using it continues to make the industry more transparent and secure every day.
At times, we might also ask you to pass KYC. However, it’s not a requirement for every user. You can go through this procedure in advance: write a letter to [email protected], and we will send you a link to pass KYC.
Suspicious activity indicators are identified in accordance with our risk-scoring algorithm. Our system flags these transactions when:
1. Users create multiple accounts using disposable emails
2. Users try to cheat us during the KYC procedure
3. We detect mixers and/or black market wallet addresses, and more
Please note that we have implemented a Know-Your-Transaction service that is the real-time anti-money-laundering compliance solution for monitoring cryptocurrency transactions. As a result of its targeted approach, it empowered our Changelly security team to significantly speed up the detection of transactions with fraudulent funds involved. Read more: AML/KYC Policy
It’s crucial to understand that KYC serves an essential purpose for protection, even if some consider it a pain in the neck. In this piece, we want to get our point across using real-life scenarios.
- KYC/AML in traditional banking
- KYC/AML in crypto
- Case: Changelly helps to recover stolen funds from Bithumb
- Why is it crucial to pass KYC?
- How to pass KYC?
- The Documents You Need to Pass KYC:
- When your KYC is rejected
- How long can your transaction be on hold?
- What about my personal data?
- KYC on Changelly PRO
KYC/AML in traditional banking
KYC, or Know Your Customer/Client, is a process of client identification. To use bank services, customers need to provide their credentials (ID – Identification Documents).
AML practices are broader than KYC and include a range of measures to prevent such crimes as money laundering, fraud risk, tax evasion, and financing of terrorism.
- Risk-based AML policies
- AML compliance training programs for staff
- KYC procedures: Customer Due Diligence (CDD) or Enhanced Due Diligence (EDD), and more.
Banks, or any financial institutions, must create anti-money laundering policies according to the rules and regulations of the country (or state) they operate in. If a bank or a fintech company neglects such procedures, it can be fined or get other penalties.
KYC/AML in crypto
Every year more and more people become involved in cryptocurrencies. The requirements of regulators to crypto-associated platforms are steadily growing, turning the adoption of KYC practices into a powerful industry response.
That is why we use the KYC procedure as a method to comply with anti-money laundering regulations. There is a range of problems that KYC solves in the crypto sphere:
- makes the market transparent for both users and companies
- helps to avoid any illegal activities
- promotes mass adoption within the framework of the existing laws
- helps to get money back to the rightful owners
In 2020 crypto crime was down 57%, dropping from $4.5 billion in 2019 to $1.9 billion in 2020. – Cryptocurrency Crime and Anti-Money Laundering Report, February 2021 by CipherTrace.
There have been many cases when the KYC check helped to detect criminals and get money back. One of them is a scandal associated with the Bithumb hack. Back then, our AML measures helped to return money to its owners.
Case: Changelly helps to recover stolen funds from Bithumb
In March 2019, a South Korean crypto exchange Bithumb was hacked for the second time that year. Multiple journalists reported that $13 Million in EOS and 20 Million XRP were stolen. Some vigilant crypto enthusiasts have traced the funds and noticed that a part of thе money had been moved towards Changelly.
While being in touch with Bithumb and other biggest crypto exchanges, Changelly traced a part of the compromised funds back to 8 transactions totaling 210,000 XRP (~$69,300) and 50 other transactions totaling 114,000 EOS (~$479,000 ). We have put the suspicious transactions on hold and blacklisted wallet addresses that were involved in those operations.
According to the Changelly security department report, on April 2, the total number of intercepted funds was equal to 121,000 EOS (~$555,390) and 210,000 XRP (~$69,300). The total number of blacklisted addresses was 134. The rightful owners had their funds recovered.
To make recoveries like that possible, we cooperate with private investigation agencies. One of them is CipherBlade, a company that monitors cryptocurrencies and blockchain in case of criminal activity. The company traces criminals’ digital footsteps and helps to get stolen funds back to their owners.
Why is it crucial to pass KYC?
Changelly is not the only platform that may ask users to pass KYC. All organizations related to cryptocurrency trade and exchange follow the same rules.
It is no secret that in the past many people have viewed crypto as something made exclusively for criminals. Regulation helps to attract established institutions, big companies, and your average Joe to the crypto world.
How to pass KYC?
Did you know that passing a KYC is as easy as ABC? The process is slightly different depending on where you initiated the transaction, but the gist of it is the same. So let’s go through it step by step!
Exchange/purchase was initiated on our website/Changelly app (registered user)
- We will send you an email with all the info you need to know to pass the check.
Log into your Changelly account to submit your KYC application via the Sumsub widget right on our website.
Exchange/purchase was initiated via our API partners/Changelly app (unregistered user)
- Your transaction will be put on hold, and you will have to contact [email protected]. We will then send you a link that you can use to pass KYC.
The Documents You Need to Pass KYC:
- Your ID
Send us a high-quality photo of your personal identity document. It has to be valid in your country.
- A picture of you holding your ID
To ensure that you’re the rightful owner of your ID, we require you to take a picture (or a video) of your face next to the ID you are sending to us.
- Proof of source of funds
You might be requested to prove the origin of your funds. In this case, you will have to explain how you obtained them and attach corresponding documents or screenshots.
It can be one of the following:
- Receipts from cryptocurrency sellers
- Bank statements
- Screenshot from an exchange/trading platform, and so on.
4. Liveness check
Instant facial verification made via the camera of your device.
When your KYC is rejected
There are some cases where your KYC can be rejected:
- You’re a resident of a country we do not operate in
- There have been discrepancies (mismatch) between your face and the face on the ID you provided
- We have discovered your documents to be fake and/or edited
- The photos are blurry
- And more
If your KYC gets rejected, our security team will contact you to resolve the issue and help you to pass the procedure again when possible.
We want to make sure that all of our users pass KYC successfully, so we do our best to contact every person who has expressed dissatisfaction with our service and help them resolve their issues. However, there are cases where applications are rejected not because of a user’s honest mistake but because the person who submitted it purposefully attempted to deceive us.
While criminals get taken care of by the police, the kind of fraudsters who either don’t understand the role of AML compliance in mass adoption or don’t care about the future prosperity of crypto can roam free. In some cases, they start spreading negative feedback on the Internet in hopes that we will make an exception for them in exchange for positive publicity.
However, because we take AML very seriously, we will not compromise our commitment to the security of our customers and services.
How long can your transaction be on hold?
Sometimes, it can take us several weeks or even months to check your transactions. This is because a bunch of different stakeholders can be involved in the review process. In most cases, such a lengthy investigation will not be needed.
We are actively working with agencies and regulators to make the crypto sphere more transparent for all market participants. Since we are not the only ones involved in the investigations, we cannot estimate the exact time required to clarify all the circumstances.
What about my personal data?
Since we care about the security of your data, we store all your personal information in accordance with applicable laws and regulations, e.g., GDPR.
We understand that the whole process might be annoying, but the more criminals are caught, the safer and more secure the crypto space will be for all of us.
KYC on Changelly PRO
PRO customers can use the exchange services without providing personal data, but some limits will be imposed on the account. To increase the amount you can trade and withdraw, you will need to go through the KYC.
The KYC process on Changelly PRO differs from the one on Changelly:
- You can initiate the check in your profile settings
- During the procedure, we will ask you to take a selfie with your ID and a piece of paper containing the date, your email address, and the platform’s name
- On PRO, you can also be asked to send us a proof of address. It can be a bank/credit card statement, utility bill, council tax bill or tax return, internet/landline phone/cable TV bill