A Complete Explanation About KYC, and Its Benefits

Basically, KYC is one of the policies implemented by financial service agencies or banks to find out the identity and monitor the transaction activities of their customers.

In Indonesia, the implementation of KYC has been regulated by the government for every banking institution in Indonesia. This regulation is contained in the provisions of the Financial Services Authority (OJK) Number 12/POJK.01/2017, which was amended by POJK No.23/POJK/01/2019.

KYC practice as the principle of knowing your customer is almost applied to all financial products such as banking, investment, and crypto.

Several documents are usually required to do KYC, such as a telephone number, a photo of an identity card, and a photo of yourself with an ID card.

KYC benefits

There are several benefits when a bank or related institution or in the crypto world, here are some of the benefits.

• Banks or related agencies can get to know their customers more deeply and intensely.
• Helping to know and understand the character of customer transactions.
• Measuring customers’ anti-money laundering risk with the aim of monitoring their transaction activities.
• The verification process is more efficient.
• Provide protection to customers in preventing all forms of fraud and loss.
• Of course there are many other benefits of KYC that cannot be mentioned above.

In the crypto world, KYC is very important, due to the prevalence of illicit fund laundering and tax evasion. Improving cryptocurrency regulation improves reputation and ensures that taxes are paid where they should be. There are 3 main reasons why KYC is indispensable in the crypto world.

• Crypto is highly anonymous. You don’t need to submit any personal data to open an encrypted wallet.
• Regulations are still uncertain regarding the taxation and legality of cryptography in many countries
• Blockchain transactions are immutable. If something goes wrong or theft of funds it cannot be recovered.

The KYC process is the industry standard for financial services and encrypted exchanges. This is one of the most important functions in the fight against money laundering and other crimes. In essence, KYC is a policy used to recognize and understand the identity of their customers.