However, two you will hear now and then in the ecosystem are AML and KYC.
But how do they differ in scope?
What Is AML in Crypto?
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AML stands for Anti-Money Laundering.
With this disguise, they can spend and invest money without raising eyebrows.
Due to its anonymity, crypto appeals to criminals as a way to wash (launder) money.
What Is KYC in Crypto?
Then, they verify your identity by matching the information you provided with public records or conducting background checks.
Once your identity has been verified, you are granted certain access to their services.
Additionally, proof of income or address will give you unlimited access to their services.
Top crypto exchanges like Binance, Coinbase, and Krakencarry out this process when signing up new customers.
As a matter of fact, acrypto exchange without KYC should raise red flagsabout its legitimacy.
Something worthy of note is that KYC regulations differ by country and region.
Some regions may be more or less strict with KYC.
What Are the Similarities and Differences Between AML and KYC?
At the baseline, AML and KYC seek to prevent illegal activities in the crypto world.
But while AML concentrates on eliminating money laundering specifically, KYC focuses on preventing fraud and other illegal activities.
Both work arm in arm to ensure that cryptocurrency is used legitimately.
AML is the field detective on a mission looking for money launderers.
One main difference we must not miss to highlight is their implementation.
This forms a major part of risk management practices.
