Blog

Jun 16

2020

On Exchange Security: The Importance of KYC to an Exchange

A host of new and evolving cybersecurity threats has the information security industry on high alert. Phishing has become more sophisticated. Ransomware attacks are believed to cost victims billions of dollars every year. All sorts of financial crimes are on the increase and more and more innocent individuals are becoming victims. What can business owners do to ensure the safety of the funds of her customers? What means can be adopted to secure and grant the human race the financial freedom it sorely yearns for?

Introducing KYC

  • What is KYC?

  • Where is it used?

  • Why is it important?

  • The role of KYC in an exchange

What is KYC?

The Know Your Customer or Know Your Client (KYC) guidelines in financial services requires that professionals make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship.  The procedures fit within the broader scope of a bank's Anti-Money Laundering (AML) policy. KYC processes are also employed by companies of all sizes for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant, and are actually who they claim to be. This can be done before or during the start of doing business with them or providing the service. 

Where is it used?

Initially, these regulations were imposed only on the financial institutions but now the non-financial industry, fintech, virtual assets dealers, and even the non-profit organizations are liable to oblige. The KYC as an instrument of identity verification is used by the following financial institutions: banking, real estate, law firms, insurance companies, money services businesses (MSB) like Bureaux de change and cryptocurrency exchanges. 

Why is it important?

A KYC process is important to prevent criminals from using the business to carry out fraudulent acts like money laundering. It can also be used to trace the source of a suspicious transaction for legal procedure. KYC is important because it helps the business owner to ensure that the application and other details are real. There have been instances of fraud and siphoning of money from accounts. Ensuring the identity of individuals, helps to prevent fraud. KYC procedures also enable business and financial institutions to know/understand their customers and their financial dealings better which in turn helps them manage their risks prudently.

The role of KYC in an exchange

Bitfxt exchange requires its users to have their KYC process completed before allowing them complete access to all services. The Know Your Customer practice has been in vogue for many years now. It is a must and all individuals have to comply, if they wish to own and fully access their account. For instance, it is not possible to deposit or withdraw on Bitfxt Exchange without KYC compliance. All documents must be duly provided, submitted and manually approved before access to the full features of the platform is granted. The following are required documents for Bitfxt KYC: 

  1. An active phone number 

  2. National Identity Card, Permanent Voters Card or any valid means of identification. 

  3. Your BVN

  4. A selfie with you holding a paper written the date and BITFXT. 

Follow this link to learn how to create and set up a BITFXT account.

 

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