What is KYC or Know Your Customer?
KYC, which stands for Know Your Customer or Know Your Client, is the obligation imposed on financial institutions to perform a certain level of identity and background checks on their clients. The KYC measures should be conducted before the client is enabled to use the products or services available on the platform. Crypto exchange and other financial institutions may require a government-issued ID, bank statements, utility bills, or other documents as part of the account verification process subject to KYC regulation. Nowadays, facial verification is also part of the KYC process in line with the AML compliance regulations.
KYC is one of the measures set by regulators to fight anonymous crypto transactions and money laundering activities. A crypto exchange that failed to perform KYC measures may be held liable when users manage to execute criminal activities.