What is KYC (identity verification)?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
KYC is the process by which a provider confirms who is opening an account. Registered crypto exchanges in Japan are required to verify their customers, so you cannot start trading without submitting documents. It feels like friction, but tracing stolen funds and shutting down fraudulent accounts both depend on it.
Key points
- Opening an account requires ID documents and a face photo
- It is a legal duty placed on the provider, not an optional check
- Opening an account in someone else's name is prohibited
- Deposits and trading stay locked until verification completes
Definition
The procedure by which a financial service verifies a customer's name, address and date of birth against official documents. Short for Know Your Customer, it is carried out in Japan under anti-crime-proceeds legislation.
An exchange checks your name, address and date of birth against an official document such as a driving licence or ID card. Most services now photograph the document and your face on a phone and match them on the spot, which can finish in hours rather than waiting for postal confirmation.
Verification is not limited to sign-up. If your trading grows in size, or if your activity does not match what you registered, the provider may ask for further documents or an explanation of where the funds came from. This is a legal procedure, not a judgement about you.
The checks are tedious, but anonymous accounts would otherwise become the cash-out point for stolen funds and scams. Exchanges can freeze proceeds of a hack precisely because they can trace who holds the receiving account. Using an overseas service with no verification means giving up that protection too.
Watch out for
- · Treat any request to send ID photos over social media or chat as fraud
- · Lending or selling your account to someone else can make you a party to a crime
- · Required documents change with the provider and with the rules, so check the current guidance