KYC and AML

Know Your Customer (KYC) and Anti-Money Laundering (AML) rules require financial intermediaries to verify who their customers are and monitor for suspicious activity. In crypto, that usually means centralized exchanges, custodians, and payment processors — the places where fiat enters and leaves the on-chain economy.

The Travel Rule extends this logic across institutions: when virtual assets move between VASPs (Virtual Asset Service Providers), originator and beneficiary information may need to travel with the transfer. Implementation varies by country and asset type, but the direction is toward more traceability at regulated touchpoints.

Privacy advocates push back — KYC creates honeypots of personal data and excludes the unbanked. Regulators counter that anonymous fiat gateways enable ransomware and sanctions evasion. Most major exchanges now treat full KYC as non-negotiable for retail access. This is educational context on how the system works, not guidance on evading it.