KYC/AML/CTF – what is it?
What Is KYC?
If you are new to trading you likely have seen the phrase “KYC”. KYC stands for “Know Your Customer”. AUSTRAC requires all Digitial Currency Exchange Providers to obtain KYC.
Consequently business’s in the Bitcoin trading industry must ensure they know their traders detailed information. As a result first time traders with McLeod Pacific go through a ID Verification process. Hence collection of 100 points of ID from traders, plus a phone number are required.. Further assessment of customers including risk tolerance, investment knowledge, and financial position are also done. Thereby larger OTC trades are required to supply more substantiative KYC.
KYC protects both clients and Bitcoin traders. Namely Traders are protected by their Bitcoin trader knowing what best suits their situations. Conversly Bitcoin Traders are protected by knowing what they can and cannot include in their customer’s profile.
KYC compliance typically involves rigid requirements and policies. Such as riskmanagement, customer acceptance policies, and transaction monitoring.
What is AML?
The phrase “AML” and “CTF” is used regularly in the banking and securities industry. It specifically refers to the AML/CTF Act. In brief, this is the Anti-Money Laundering and Counter-Terrorism Financing Act.
Likewise with banks, Digital Currency Exchange provider are exposed to money laundering. Subsequently trades could be used to launder money and finance terrorism.
We are required by Australian law and applicable local laws to abide by certain factors during a trade. Ordinarily they are compliance, risk assessment and training. Additionally they also include controls and systems in place to mitigate this risk.
AUSTRAC requires us to do this. However we also do it to protect our reputation and be a good corporate and social citizen.
What is CTF?
What is CTF? It stands for “Countering Terroism Funding”. Similarly to AML, Digital Currency exchanges can be exposed to Terroism Funding. Thereby we are required to have controls in place to identify potential Terroism Funding. AUSTRAC also requires us to report any trade we believe to be suspicious of Terroism Funding.