More than half of crypto exchanges still do not have sufficient KYC procedures, report finds

Crypto exchanges may still be struggling with compliance, according to regtech startup Coinfirm’s report. The study analysed 216 exchanges globally, concentrating on know-your-customer and anti-money laundering procedures.

Sixty-nine per cent of exchanges do not have “complete and transparent” KYC procedures, Coinfirm found. Out of those that require KYC, the procedure requires identity verification using a scanned copy of an ID or passport; some require a second type of identity verification.

According to the research, “some exchanges observe higher standards of KYC compliance and require proof of a bank account (e.g. Kraken, Gemini, Stronghold, ISX), the source of funds (e.g. Poloniex, Gatecoin), and, in some cases, a video interview (e.g. Gatecoin, OKCoin.cn).”

However, it looks slightly better on the AML front. The study shows 58 per cent of exchanges confirmed to have AML statements in place—that is 75 per cent in terms of transactions volume assessed as lower- to medium-risk. However, no more than 26 per cent have introduced ALM procedures, such as ongoing monitoring of transactions or recruiting a Money Laundering Reporting Officer.

Interestingly, Coinfirm categorised Binance as high-risk--although the exchange implemented changes, Coinfirm takes into account the long period when Binance allowed anonymous transactions. Moreover, Coinfirm states, the exchange has been "regularly changing the jurisdiction of domicile."