Stop scams, verify good users and prevent account takeover attacks in real time

Know Your Customer (KYC) refers to due diligence processes required by anti-money laundering (AML) laws such as the USA PATRIOT Act and the Bank Secrecy Act (BSA). These compliance obligations bind all financial institutions (FIs). According to the Financial Crimes Enforcement Network (FinCEN), this includes businesses that transact in virtual currency, such as crypto exchanges, NFT marketplaces, and metaverse platforms. The purpose of KYC crypto laws is to combat the type of fraud and scams that netted $5.6 billion for bad actors in 2023, as well as prevent funding from reaching criminal operations. 

Cryptocurrency organizations must comply with all identity verification standards and due diligence mandates in US Federal laws and regulations on financial institutions (FIs). KYC crypto compliance includes three core components: 

• Customer Identification Program (CIP): The BSA stipulates that cryptos implement a risk-based approach for verifying the identity of customers who open accounts or access services. This customer onboarding process should be well-documented, available for review at any time in the event of an audit, and kept up-to-date. 

• Customer Due Diligence (CDD): Factors such as occupation, geographical location, and online activity should be used to assess the risk of existing customers and during new customer onboarding. Customer risk profiles are then used to comply with enhanced due diligence (EDD) requirements that mandate increased vetting for high-risk individuals.
• Ongoing Monitoring: At customer onboarding and beyond, crypto companies must monitor all transactions and on-chain activity so that suspicious behavior can be identified and reported to the authorities immediately. Changes in customer information should also be tracked to verify the legal status of the account holder and any new beneficial owner(s).

Without the KYC crypto controls in place to reliably verify customers, a business risks facilitating criminal transactions, violating financial regulations, and breaching Office of Foreign Assets Control (OFAC) sanctions. The penalties for neglecting to establish compliant processes may include billion-dollar fines and prison sentences for executives. 

Identity verification helps prevent financial crimes, ensures regulatory compliance, and protects users from fraud. This is especially important in the crypto space due to the immutable nature of blockchain transactions. Unlike traditional banking where chargebacks can be used to restore funds, crypto transfers can rarely be reversed once executed. This makes virtual currencies uniquely attractive to bad actors and scammers and is why robust identity checks at the customer onboarding stage are exceptionally vital for protecting users and platforms alike. Strong verification also builds trust in the company’s ecosystem by demonstrating continuous compliance with stringent KYC crypto standards. 

Socure takes a multi-layered approach to identity verification, triggering enhanced KYC crypto checks based on behavioral analytics and transaction activity. The platform’s progressive, low-friction mechanism to evaluate trust detects and adapts in real-time to a wide range of risk signals, including:

• Device risk (Remote desktop access, velocity, IP address)
• High-risk wallets and connections to other wallets
• Geographic location (proximity to sanctioned wallets)
• Unusual transaction flows
• Anomalous user behavior

When these triggers are detected, Socure’s machine learning algorithms instantly activate additional verification processes, such as hyper-accurate document verification or liveness detection via biometric analysis.

Unlike other tools that provide spot checks (email address risk assessment, phone number verification, or watchlist screening), Socure’s KYC crypto identification platform delivers an integrated, holistic view of identity. Capable of stopping up to 99% of all forms of ID fraud and reducing fraud decisioning to less than 150 milliseconds, Socure is trusted by over 2,800 top enterprises for KYC. The solution improves auto-approval rates by up to 40% and reduces manual reviews by up to 90%. Powered by an advanced AI trained on feedback data from the industry’s top consortium network—Sigma Identity—Socure makes low-risk customer onboarding easier without compromising platform security or compliance. This comprehensive identification solution also provides up to 95% coverage for hard-to-verify users, including thin-file and Gen Z customers, enabling crypto businesses to grow with confidence.