Identity Verification for Crypto, Blockchain & NFT Compliance

Similar to how KYC works for individuals, KYB for crypto verifies the identity of a business that’s engaged in crypto activities. However, KYB compliance is more complex because it involves running a thorough check on both the company itself (such as its business license registration, address, etc.) and all the individuals linked to it. This helps determine the company’s true ownership structure through measures like Ultimate Beneficial Owner (UBO) verification and risk assessment. Ultimately, KYB evaluates potential risks associated with another business, helping you decide whether to establish a relationship with the entity.

iDenfy offers various custom-tailored KYC solutions for the crypto industry, helping platforms build their own custom identity verification flows, depending on their risk appetite. For example, document verification can be paired with a selfie check or address verification, where the user is asked to both upload their ID and a utility bill to approve their identity before gaining access to the platform. Other tools, such as face verification service, are also available, for example, triggering identity verification before a high-value transaction.

Virtual Asset Service Providers (VASPs) facilitate exchanges between different virtual assets or between virtual assets and fiat currencies. These crypto companies are also required to implement a proper KYC process. 

To stay compliant, VASPs should integrate the following steps:

• Collect the user’s personal data, such as their full name, address, and date of birth. 
• Verify this data by cross-checking it with a government-issued ID (passport, for example) and proof of address (PoA), such as a utility bill. 
• Screen users against AML databases, such as PEPs and sanctions lists. 

If the customer passes the KYC check offered by identity verification companies (iDenfy, Jumio, Sumsub, and others), they can access the crypto exchange or any other service the platform offers. 

The Travel Rule, also known as the FATF’s Recommendation 16,  is a regulatory standard targeting various financial companies and VASPs that are involved in virtual asset transfers. It requires VASPs to obtain and disclose information about the sender and recipient of a virtual asset transfer (either during or before the transaction) to counterpart VASPs or financial institutions, such as the sender’s name, account number, address and the recipient’s name and account number. It aims to combat money laundering, terrorist financing, and emerging financial crimes associated with virtual currencies. So, this requires KYC verification. However, the FATF also recommends conducting due diligence on other VASPs and their counterparts in the same way traditional financial institutions perform KYB checks to establish trusted partnerships.

Verifying another business and conducting KYB checks is crucial to spot sanctioned entities, suspicious ownership structures and, more importantly, fraud, such as money laundering using various corporate structure schemes. Partnering with such an entity would result in non-compliance. That’s why iDenfy’s complete RegTech software carries all the necessary tools for you to stay compliant with KYB, KYC and AML requirements. Features include UBO verification, registry checks, PEPs and sanctions screening, watchlist screening, adverse media screening, and automated risk assessment, as well as other built-in tools like PDF reports and questionnaires for quicker and more accurate data verification. Get started here.

Absolutely. By verifying who is behind each account, crypto companies can block fake identities, prevent account takeovers, and reduce the risk of scams. iDenfy’s fraud prevention tools work alongside identity verification to strengthen platform security.

Typically, it involves collecting a government-issued ID, a selfie, and sometimes proof of address. iDenfy’s system automates this by using biometric checks and document verification tools, making the process fast and user-friendly.