Sumsub
The Sumsuber

Best practices for KYC/AML

Guides
2022-07-15
3 min read

How crypto businesses can balance compliance and pass rates while onboarding more users

Effective onboarding is key to success for crypto businesses. This article reveals how customization can lead to compliant, high-conversion KYC.

Thorough KYC is a must for regulated crypto businesses. But if it isn’t done right, it can make the onboarding process too burdensome for users and result in drop offs. 

Luckily, there are certain strategies that can help businesses  bring compliance and high pass rates together. This includes dividing verification into levels, localizing your interface into different languages, and branding the verification flow. Read on for a detailed breakdown.

What the KYC procedure should include for crypto businesses

Certain crypto businesses already fall under the scope of Anti-Money Laundering (AML) regulations in most jurisdictions. Their users are typically international, which means that the KYC process must cover:

Certain crypto businesses already fall under the scope of Anti-Money Laundering (AML) regulations in most jurisdictions. Their users are typically international, which means that the KYC process must cover:

Differences in acceptable documents and data. Crypto businesses should be able to work with IDs and proof of address documents from different countries, taking into account local specifics. For instance, Austria-based users can provide an electronically signed ID with an electronic security chip (NFC chip) during KYC onboarding.

Also, documents are written in non-Latin characters in many jurisdictions, so businesses should know how to swiftly and accurately process such documents.

Before entering the target market, make sure that your verification provider employs accurate Optical Character Recognition (OCR) technology that can recognize the writing system there. Also, ask your provider for information on accepted documents and pass rates in your target market.

PETER SEVER

Chief Strategy Officer (excerpt from State of Identity Verification in the Crypto Industry)

Regulatory restrictions for crypto businesses. Some countries can place restrictions to crypto dealings on their territory (e.g., China) or impose additional regulatory requirements. For instance, in the US, Initial coin offerings (ICOs) can be considered securities that require registration/authorisation.

Additional checks for certain users. For instance, in the US, identity and proof of address checks aren’t always enough to verify crypto cases. Oftentimes, such users need to be checked for their accredited investor status as well. This is just one example, but you can expect to see specific requirements like this across many different jurisdictions.

Not all automated solutions can handle the differing KYC requirements of various countries. That’s why crypto businesses need to find a solution that can adjust to a wide range of requirements while keeping the customer journey easy.

Learn how to tailor the KYC process to your needs. Request a demo today.

How crypto businesses can customize their KYC process

Sumsub works with more than 1,000 customers including crypto companies like Bybit, Paybis, and Xena. Here’s what we’ve learned about customizing the verification process over the years.

Splitting verification into levels. Dividing the KYC process into levels (stages), such as pre-screening and advanced screening, reduces drop-offs and secures transactions.

  1. Pre-screening. When a user signs up for the first time, they can pass a simple identification level—say, entering their phone number and email—without going through the entire verification procedure. This is so that new customers can ease into the service and have a look around.
  2. Advanced screening. Once the user decides to complete a step requiring verification, such as a crypto transfer, they can go through a combination of the following checks:
    • ID verification
    • Address verification
    • AML screening
    • Questionnaire
    • Crypto screening
    • Bank card verification
    • Face authentication, if needed

Localizing interfaces. Sumsub’s analytics show that the majority of crypto users speak English, Portuguese, Spanish, Vietnamese, and Russian. Therefore, businesses should consider localizing their interfaces into these languages. This can increase customer satisfaction and pass rates.

Increasing checks only for high-risk customers. Businesses can consider employing additional checks only when there are clear risk indicators present, such as Politically Exposed Person (PEP) status or high-risk countries of origin.

Branding the verification process. This assures applicants that they’re interacting with your company. Plus, you can match the look and feel of your verification flow to your branding. Customizable elements include:

  • colors
  • fonts
  • instructions and tips for passing verification

How to further improve user experience during verification

Crypto businesses can further improve user experience with the following features:

  1. Assisted image capture—reduces drop-offs during the ID scanning process by automatically capturing the required fields of a document.
  2. Fast fail—users get hints and real-time feedback if they make a mistake during verification.
  3. Opportunity to continue verification on mobile—users can complete verification on other devices through a link, QR code or SMS.
  4. Reusable KYC—business partners can exchange KYC data to eliminate repeat verification for overlapping users.

Sumsub prepared a comprehensive KYC guide for the crypto industry with tips on handling common challenges.

Download our guide to successfully balance compliance and high conversion and get ahead of the game!

Share