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Best practices for KYC/AML

How to
2022-05-25
3 min read

How KYC Providers Can Help Crypto Businesses Scale

Complying with regulations doesn’t have to be an issue for crypto businesses launching in new markets. In this article, we explain how KYC providers can help your crypto business scale successfully.

More and more countries are putting crypto companies under the scope of Anti-Money Laundering (AML) regulations. Accordingly, crypto businesses have to implement Know Your Customer (KYC) solutions as part of their Customer Due Diligence (CDD) procedures.

To learn more about the KYC regulations for crypto businesses, read our dedicated article.

KYC and CDD tools not only help crypto companies comply with regulations, they also enable scaling when launching in new countries. With the proper tools in place, crypto businesses can meet the following objectives:

  • Comply with local regulations;
  • Adapt to different types of required documents;
  • Keep high pass rates.

Yet, not all crypto companies understand how verification solutions can help them. That’s why Sumsub has prepared four tips for businesses to scale easily and save money with automated KYC solutions. All of them are based on our personal experience from working with the leading crypto companies from all over the world.

Tip #1. Regulatory specifics

When launching in new countries, crypto businesses should learn about the crypto regulations relevant to the region. So, if a crypto company is planning to launch in the EU, it should be aware of the strict rules in the 4th and 5th AMLDs. By the same token, those launching in Latin American countries should note less strict rules, as this region is still developing its crypto regulations.

For an expanding crypto business, it’s necessary to create an onboarding system that takes all regulatory specifics into account. That’s when a professional KYC provider can help.

When choosing among KYC providers, the key criteria should be 1) their awareness of regulatory requirements in different countries and 2) whether their system can account for the specific AML/CFT obligations of particular clients.

Sumsub maintains in-house compliance specialists to assist clients on all things compliance and constantly improves its automated solution to suit particular use cases. In particular, Sumsub helped its client Xena facilitate personal data protection covering all customers from Europe, the USA, Asia, and the Commonwealth of Independent States.

Tip #2. Adapt to local documents

When expanding to new markets, KYC providers should ensure compatibility with regional documents. For example, businesses operating in Nigeria should be able to collect National Identity Numbers (NINs), which can be used to verify users by comparing obtained identity information with the country’s NIN-linked database.

There are all sorts of regional nuances when it comes to acceptable documents. For instance, clients generally can’t provide expired documents during the onboarding process. But, in Brazil, driver’s licenses must be considered valid—solely for identification purposes—even after they expire.

Document formats can have their own regional specifics that providers should adapt to. In Turkey, for example, driver’s licenses can end up having the same number, leading to rejection. To adapt to this peculiarity, Sumsub created a special feature that adjusts the verification process so that numbers-matching DL holders don’t get rejected as duplicates.

Crypto users often come from emerging countries, which may have non-standardized documents or those written in non-Latin script. Proper KYC providers use adaptable optical character recognition (OCR) to encounter such situations.

Crypto businesses should ensure that their KYC provider uses OCR that recognizes atypical documents and reads non-Latin alphabets. This solution should also be able to convert such text into a computer-readable format. Proper OCR solution will create a fast verification procedure and keep a high pass rate for crypto companies launching in new countries.

Does your crypto business work with complicated documents from different countries? Contact Sumsub today to learn how our OCR solution can help you.

Tip #3. Adapt to the local market

Crypto businesses need to account for the specific characteristics of a given market. These can include:

  • Language—companies should adjust their offerings to the most widely spoken language(s) in a given region. For instance, a company launching in Central America would have a higher number of clients if it uses a Spanish-language interface;
  • Slow internet—in certain countries, the onboarding process may be slower due to weak internet connections. In such cases, a crypto company may decide to include a simpler interface or have fewer steps during the onboarding process.

In any case, a flexible verification solution is a must. Proper KYC providers can help crypto companies by constructing a dashboard that enables creating custom customer journeys depending on different parameters, e.g., the user’s country or risk profile. Sumsub’s flexible KYC solution does just that.

Use Sumsub’s KYC solution to achieve up to 98% of pass rate.

Tip#4. Adapt to the country’s risk score

When working with clients from different countries, crypto businesses need to determine the risk factors and fraud levels inherent. They should also customize the customer onboarding flow to mitigate liabilities posed by customers from higher-risk countries—for example, by requesting additional data and documents during the verification process, conducting a liveness check, or setting transaction limits. These steps help minimize the risks of money laundering and other illegal activities.

All in all, businesses should consider KYC providers that match expectations and create optimal verification flows to comply with regulations and simplify the onboarding process.


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