KYC & AML In Crypto Payments

Until recently, the crypto world was associated with anonymity and freedom from government control. But the popularity of Bitcoin and other digital assets is growing, and with Donald Trump’s arrival as US president, regulators around the world are paying closer attention to the crypto sphere. The Cryptomus platform has been adapting to these changes, ensuring that its operations remain compliant with evolving regulations.

Now, the popularity of cryptocurrencies goes hand in hand with the need for strict compliance with legal norms in terms of anti-money laundering (AML) and strengthening know-your-customer (KYC) identification. Speaking of Cryptomus, it is committed to maintaining the highest standards of compliance, offering a secure and transparent platform for its users.

In today’s article, we will discuss in detail the aspects of crypto regulation in the EU and the UK and how crypto processing services are adapting to them, using Cryptomus as an example.

What Is Cryptomus?

Cryptomus is a multifunctional platform designed for both business and personal use. E-commerce, retailers, many other projects, and individual users rely on Cryptomus for tens of thousands of daily cryptocurrency transactions.

Crypto Regulations In The EU And The UK

In the European Union, two key pieces of law form the legal basis for regulating the crypto platforms’ activities. First, since June 2023, the MiCA (Markets in Crypto-Assets Regulation) bill has been in development—a regulation aimed at creating a single regulatory space for transactions with crypto assets. Thus, the law will monitor the issuance, circulation, and storage of digital assets; it entails requirements for the registration of service providers and compliance with transparency standards. 

This means that the crypto platforms’ owners are fully responsible for the activities taking place within the exchange, and these processes must be legal. And the Cryptomus platform is already preparing to align with MiCA’s requirements to ensure a secure and compliant environment for its users.

The MICA bill is currently being developed and will come into full force in stages in 2024–2025. Cryptomus is taking proactive steps to ensure it complies with these new reporting requirements ahead of time. It is also expected that from 2026, all crypto platforms will be required to report information about customer transactions to tax authorities, which will automatically exchange this data. 

Secondly, the EU has the AMLD (Anti-Money Laundering Directive) Act, specifically its fifth revision (AMLD5); it imposes obligations to implement AML/KYC procedures. This means that exchangers and wallet providers are required to conduct KYC and register with the relevant authorities in their countries. AMLD rules apply to both traditional financial institutions and crypto platforms. Speaking of Cryptomus, it has already integrated robust AML/KYC measures into its platform to comply with these regulations and protect its users.

As for the UK, after leaving the EU in 2020, it regulates the crypto market through the Financial Conduct Authority (FCA). Starting in 2021, all crypto provider services are required to register with the FCA. This way they comply with KYC and AML procedures, report suspicious activity, and ensure user protection. Failure to comply with these regulations may result in the platform being shut down.

What Are KYC And AML In Cryptocurrencies?

Let’s take a closer look at the main procedures and their significance. The KYC (Know Your Customer) procedure refers to the mandatory verification of a customer’s identity on a crypto platform or exchange. The Cryptomus platform implements this procedure to ensure that only verified users can access and trade on the platform. Thus, the main and only purpose of the KYC procedure is to verify the customer’s identity and prevent fraudsters from gaining access.

The KYC process involves collecting and verifying personal data—most often, passport information is checked against a selfie you send. This way, the validator confirms that you are a real person. Also, if you want to unlock more features with crypto within the platform, in some cases you will need to undergo advanced verification in the form of confirming your address and/or even providing information about the source of your funds. Cryptomus makes sure to maintain a secure and seamless KYC process to protect its users’ privacy while ensuring compliance with regulations.

As for AML (Anti-Money Laundering), it is a set of measures to combat the laundering of “dirty” money, i.e., money obtained by illegal means. These measures often include a KYC procedure, as well as further monitoring of operations within the platform and analysis of suspicious transactions. If a suspicious signal is detected, all transaction data is automatically sent to regulators for further review. The Cryptomus platform employs advanced AML measures to monitor and prevent illegal transactions, ensuring that funds flowing through the platform are legitimate.

AML and KYC usually work together because they have the same goal: to identify the user and understand whether the money stored in their crypto wallet belongs to them. Thus, these procedures help prevent dirty money from passing through cryptocurrency platforms or illegal activities from being financed. Cryptomus integrates both KYC and AML into its platform to offer a safe and compliant environment for crypto users.

Why Are AML And KYC Mandatory For Crypto Platforms?

As mentioned earlier, KYC and AML procedures are necessary for ensuring the security of crypto platforms. Cryptomus understands the importance of these measures and has implemented strict KYC/AML protocols to protect both its users and the integrity of the platform. In turn, failure to comply with these requirements turns the crypto field into a hotbed of anonymous and criminal operations. It is important to note that KYC/AML checks are not conducted by the crypto platform itself, but by authorized partners.

While identification was not widespread in the early years of the crypto industry, today KYC/AML compliance is literally impossible to ignore. Cryptomus, as a responsible and forward-thinking platform, has fully embraced these regulatory requirements to ensure the safety and security of its users. By integrating KYC/AML measures into its operations, Cryptomus not only complies with global standards but also contributes to the fight against financial crimes in the crypto space.

Without compliance with these requirements, crypto payment gateways will not allow users to process transactions, as banks may block transfers, and regulators will issue fines in the millions. Tighter regulation is a global trend: financial authorities are seeking to prevent money laundering through cryptocurrencies and protect users from fraud. 

Crypto Platforms That Have Adopted New Rules

Today, most major crypto platforms have implemented AML/KYC procedures, and Cryptomus is one such example. Since its launch in 2022, Cryptomus has evolved from a crypto payment gateway into a full ecosystem with a wallet, converter, staking, and, recently, spot exchange, while ensuring compliance with regulatory requirements and prioritizing user security through mandatory KYC and AML checks for all transactions.

By adhering to regulatory standards and focusing on security, Cryptomus has gained user trust and maintained operational stability. Every day, thousands of transactions are processed through the platform. Compliance with AML and KYC standards helps Cryptomus reduce the risk of fraud and scams while also providing a safer environment for transactions.

Other cryptocurrency exchanges, such as Binance and Coinbase, are also among the organizations required to comply with customer verification requirements. Starting in 2021, users cannot perform transactions on the Binance exchange without passing KYC. These measures have helped the platform retain its license and continue to operate legally in key European markets.

Using unverified crypto payment systems for business can lead to a bunch of nasty consequences. This can result in dirty money that cannot be moved through any legitimate platform, and in some cases, may even lead to legal trouble. It should not be forgotten that regulators can shut down an unverified crypto platform at any time and hold involved parties accountable.

Final Thoughts

Cryptocurrency payments have enormous potential for international business, but the legal and secure use of crypto assets is impossible without compliance with AML and KYC procedures. Cryptomus has taken significant steps to ensure that its platform remains fully compliant with these regulations, providing its users with a secure and trustworthy environment. Therefore, it can be assumed that the era when cryptocurrencies could be used completely anonymously and without control is coming to an end. Compliance is the new norm, which will ensure you a legal crypto field and protection from sudden account blocking. Cryptomus stands at the forefront of this shift, offering a transparent and compliant platform for its users.