Binance Know-Your-Customer, KYC and its importance.
What is Know Your Customer (KYC)?
Although the phrase “know your customer” may seem insignificant to most people, it has a very important meaning in the business world. The process of knowing your customer, otherwise referred to as KYC, is what businesses do in order to verify the identity of their clients either before or during the time that they start doing business with them. The term KYC can also reference the regulated bank practices that are similarly used to verify clients’ identities.
Banks and companies of all sizes have become big supporters of KYC. It is increasingly common for banking institutions, credit companies, and insurance agencies to require that their customers provide them with detailed information in order to ensure that they are not involved with corruption, bribery, or money laundering.
The objective of KYC guidelines is to prevent businesses from being used by criminal elements for money laundering. Related procedures also enable businesses to better understand their customers and their financial dealings. This helps them manage their risks in a well-judged manner. Today, KYC principles apply to banks as well as different online businesses. They usually frame their KYC policies incorporating the following four key elements:
- Customer acceptance policy;
- Customer identification procedures;
- Monitoring of transactions; and
- Risk management.
The stringent regulatory environment establishes KYC as a mandatory and crucial procedure for financial institutions as well as non-financial institutions. As it minimizes the risk of fraud, by identifying suspicious elements earlier on in the client-business relationship. For the purposes of a KYC policy, a customer/user may be defined as:
- a person or entity that maintains an account or has a business relationship with the reporting entity;
- one on whose behalf the account is maintained (i.e. the beneficial owner);
- Beneficiaries of transactions conducted by professional intermediaries such as stockbrokers, Chartered Accountants, or solicitors, as permitted under the law; or
- any person or entity connected with a financial transaction that can pose significant reputational or other risks to the bank, for example, a wire transfer or issue of a high-value demand draft as a single transaction.
What is the Difference Between KYC & AML?
The know your customer requirements are just one part of a broader umbrella term commonly called anti-money laundering (AML). AML includes a vast range of regulatory processes designed to curb money laundering. Other AML processes include software filtering, record management, and criminalization. KYC is simply a process of AML that involves identity verification and enhanced due diligence.
KYC, AML and all other processes put in place by regulators make it more difficult for organized criminals and terrorists to hide their illicit activities. They will be unable to make funds acquired through illegal means appear legitimate. While this is a benefit, some members of the cryptocurrency community are divided on whether exchanges should make KYC compliance mandatory. The argument is that KYC and AML regulations are against the concept of decentralization.
How Does KYC Affect Decentralization and Anonymity?
One of the most appealing features of cryptocurrencies and blockchain technology is decentralization. What this means is that no single authority has ultimate control of the system. Instead of a single database, transactions on these blockchains are stored on numerous computers across the globe through peer-to-peer nodes. So KYC requirements make cryptocurrency exchanges similar to traditional financial institutions by giving power to a centralized authority.
For users concerned with the ethos of anonymity via decentralized blockchain, losing anonymity is a high price to pay especially when they submit their KYC details to centralized cryptocurrency exchanges. While cryptocurrency exchanges promise to treat users’ private information with care, many people who prefer to maintain anonymity don’t want to take that chance. These fears are not unfounded since many exchanges still do not have robust KYC systems to secure consumer information.
There have been reports of hackers getting access to the KYC information of cryptocurrency users by taking advantage of loopholes on the software of exchanges. Binance is one of the few exchanges with a secure and dedicated system for KYC data collection and management.
Binance Obligations Regarding KYC.
As the largest Centralized Exchange in the world. Binance's sole responsibility is to curb all sorts of fraud and money laundering by implementing different stages of KYC depending on the level of funds required to be used by the customer. Although KYC on Binance is compulsory before making trades on Binance to avoid asset freezing.
More announcements can be read up on the announcement blog.
Benefits of Verification on Binance: Enjoy Upgraded Tiers
One primary benefit of KYC on Binance is that users enjoy a tier upgrade with lower fees and higher withdrawal limits. While unverified users can only withdraw a maximum of 0.06 BTC daily, those with verified accounts can withdraw up to 100 BTC daily.
Keep in mind that KYC is primarily reserved for users who opt for the credit and debit card transaction options. Those who want to perform significant transactions regularly will also benefit from completing their KYC on Binance. People who don’t complete their verification may run into some problems withdrawing funds from their Binance accounts. So, Binance encourages all users to complete the KYC process as soon as possible.
How to KYC on Binance
The KYC verification process on Binance is straightforward. The steps below will show you how to verify your Binance account.
1. Visit Binance.com
If you are a new user, you will have to create an account with your email address and password. The account creation process doesn’t take more than five minutes. If you are an existing user, simply log in with your details.
2. Click on Identification
At the top right corner of your computer screen, click on your profile avatar. That is your user center. You will see a list of options right after your user details. Click on identification to proceed to step three.
3. Click on Verify
On the next page, you should see a bold yellow button with the word verify. This should start the verification process. Note that the verification documents depend on your nationality. So, after choosing your nationality, upload your government-issued ID, name, house address, photo ID, postal code, and every other detail.
4. Complete the Verification
Confirm that all the details submitted are accurate to make sure that your verification is accepted. Complete the process and proceed to trade. Alternatively, you can opt for advanced verification method after completing basic verification.
Binance has three verification tiers: basic, intermediate, and advanced.
Information Required For Basic Verification
- Personal information
All intermediate requirements
- Basic KYC information.
- Government ID
- Facial Verification
Advanced KYC requirements
- Intermediate KYC information
- Proof of address
- 10 days review time.
- $300 Lifetime Buy Crypto & Fiat Deposits Limit
- $300 Lifetime Fiat Withdrawal
- Max. 0.06 BTC withdrawal daily
- $50,000 Daily Buy Crypto & Fiat Deposits Limit
- $50,000 Daily Fiat Withdrawal
- Max. 100 BTC Daily
- P2P/OTC/Binance Card Perks
- $200,000 Daily Buy Crypto & Fiat Deposits Limit
- $200,000 Daily Fiat Withdrawal
- No limit BTC withdrawal
- P2P/OTC/Binance Card Perks.
Submitting all your details for verification should not take more than one hour. Afterward, you will have to wait for your verification to be processed.
Get ready to kickstart your cryptocurrency journey with Binance.
After you have verified your account, there are two main ways to buy cryptocurrencies on Binance using cash: you can buy crypto with cash from Binance via bank transfer or card channels, or buy crypto with cash from other sellers on Binance P2P.
A Verified Binance account also has a lot of advantages as a Futures trader or an aspiring futures trader in terms of trade limit, minimum deposits etc.
To get started on Binance futures, you can create a Binance futures account and start trading .