Compliance as a Service for Crypto Companies

Vespia

August 26, 2022

Cryptocurrency has gone mainstream. Although still mainly utilized for investment purposes instead of outright trade, it has never been more accessible.

As the market evolves, financial regulators and legislators are eyeing whether existing laws and regulations are eligible for such technology.

Complying with regulations doesn't have to be a problem for crypto companies embarking on new markets, as business KYC providers are here to help them scale successfully.

Table of contents

  • The importance of AML and business KYC checks in Crypto companies
  • Comply with global regulations
  • Adjusting to new markets
  • Enhance customer experience and build confidence
  • Conclusion

The importance of AML and business KYC checks in Crypto companies

Compliance with Anti-Money Laundering (AML) regulations is paramount for new and existing crypto companies, especially if looking to scale by launching into new markets.

Global regulators and market players are taking a considerably closer look at crypto, so businesses can't afford to cut corners regarding Customer Due Diligence (CDD) protocols.

Beyond complying with multiple regulatory authorities, crypto companies looking to scale must comprehend and adapt to new markets and their unique contexts and organize various types of documentation that are very often in multiple languages.

These challenges leave multiple crypto firms reticent to seek further growth, especially startups and those with limited resources. After all, accomplishing all of the above in one country can be complicated enough, so doing so in multiple jurisdictions must be exponentially more difficult.

By using automated business Know Your Customer (KYC) technology, crypto companies can fulfill several key goals:

  • Comply with local regulations
  • Reach users fast and securely
  • Adapt to new markets and languages
  • Increase onboarding rates and reduce dropout rates.
  • Build trust among customers

More and more countries are positioning crypto companies under the supervision of Anti-Money Laundering (AML) regulations. Thus, crypto businesses must enforce KYC solutions as part of their Customer Due Diligence (CDD) approaches.

Let's take a closer look at some of the steps applied in adopting an automated KYC solution and the benefits it can fetch to crypto businesses.

Comply with global regulations

One of the most complicated challenges for crypto companies, and any other financial institution or virtual asset service provider (VASP), is complying with constantly-evolving regulations.

Performing in different jurisdictions often implies complying with diverse legal rules, even if a business offers its services to clients in a foreign market. So crypto companies must be mindful of the legal requirements they will be subject to in different territories.

For the EU, this means complying with regulations that include the 5th Anti-Money Laundering Directive (5AMLD); in the US, it is the Banking Secrecy Act (BSA). In the UK, it means complying with rules set by the Financial Conduct Authority (FCA). But these are just some of the main ones.

For scaling and expanding crypto companies, having a KYC onboarding technique that provides thorough verification for diverse regulatory regimes is crucial.

Employing a professional KYC provider can effectively handle this challenge without the necessity to build large and expensive in-house compliance teams.

Picking the right KYC provider for a crypto business should take into account several measures:

  1. How specialized they are in the regulatory requirements of the future jurisdictions.
  2. How customizable their onboarding platform is for the distinctive needs of the business.
  3. Is the solution seamless, effective, and efficient enough? Does it provide an ideal harmony of operation and compliance without negatively affecting customer experience?

Using an automated business KYC tool, crypto companies and other VASPs can incorporate customized, jurisdiction-specific regulatory checks that ensure they are compliant worldwide.

Cryptocurrencies and charts
Credit: RODNAE Productions. Source: Pexels 2022.

Simultaneously, different jurisdictions carry different amounts of risk.

Utilizing an automated business KYC solution built around a risk-based approach, crypto companies can guarantee they are adequately factoring in a specific country's risk profile when onboarding a customer in that jurisdiction.

For instance, businesses can ask a potential client in a country with a poor record for financial oversight, online fraud, and money laundering to present additional documents or be subjected to more verification procedures such as liveness checks or other enhanced due diligence procedures.

Hence, it is crucial to pick a business KYC provider that offers compliance checks designed for the jurisdictions they operate or plan on launching.

Vespia offers automated checks adapted to local documentation and contexts – and ensures global KYC AML compliance.

Adjusting to new markets

Verifying the business customers and their identities is a prime cornerstone of financial regulations because it is a baseline method to ensure users are responsible for their actions.

And above complying with AML regulations, one of the main motives to enforce KYC is to prevent fraud from occurring on your platform or from a service provider falling victim to it themselves.

Understanding, processing, and standardizing diverse types of required KYC documents can be a real challenge for ready-to-scale crypto companies.

Different countries usually use very different document types for ID verification, and what would be assumed invalid in some countries is considered valid in others. Likewise, some countries have non-standardized sorts of ID documentation, while others have publicly-accessible databases where ID numbers can be verified – the list goes on.

Evolved KYC solutions can quickly handle these challenges, using diverse technologies and customized approaches to factor in the nuances of different countries' documentation types.

Enhance customer experience and build confidence

While compliance with global and national AML regulations and anti-fraud conditions are vital steps for crypto companies aiming to expand into new markets, doing so in a way that doesn't create unnecessary or irritating barriers for customers is noteworthy too.

Pushing potential customers to go through drawn-out KYC procedures can result in elevated dropout rates and severely affect a crypto company's business.

That's why it is crucial to choose a KYC provider that offers a customized onboarding solution that places business customers' thorough information and identity verification experience at the center of the onboarding journey.

From ensuring customers are only subjected to the checks their risk profile demands to adjusting to local languages, documentation, and regulatory nuances – a skilled KYC solution will steer potential customers through the process effortlessly and with as little contention as possible.

Cryptocurrency platform on desktop and mobile
Credit: Anna Nekrashevich. Source: Pexels 2022.

Finally, using automated KYC can help crypto companies build trust with their customers. ID verification indicates that the company is devoted to transparency and compliance – and has invested for the long haul.

The query for crypto companies is which business KYC solution provider will be better for their needs. A professional provider should be apt to maintain vibrant, customized solutions that quickly acclimate to regional specifications.  

A better, more streamlined onboarding and verification flow are critical for scalability and compliance, so crypto companies should choose a business KYC solution with high standards and ingenious features to help the organization thrive.

Conclusion

Why Vespia's business KYC and AML solution is the best fit for your crypto company? This ever-growing new wave of the financial industry flourishes on the millions of users aiming for advanced monetary services but also cherishes the high security and reliability that come with it.

With Vespia, KYC, AML, and the business verification platform, the crypto exchanges and DeFi platforms can enforce a thorough KYC service to benefit the current users, attract new ones and ultimately promote the adoption of decentralized services.

Enhanced by technologies, Vespia offers a range of identity solutions from data verification via ID record checks, screenings on sanctions, politically exposed persons (PEPs) and their relatives, organizations of special interest (SIP), and special interest entities (SIE).

Additionally, Vespia shows global negative news (Adverse Media) and conducts a Google search on any person or company.

Together, they form a foundation for VASPs that understand the need to comply with regulations and react to the requests of their user base while trusting the best business KYC solutions on the market.

Vespia is an all-in-one business KYC provider that helps you make a decision on whom to do business with.

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