By Andrew Sever
As crypto becomes more widely accepted, regulatory requirements have become more critical than ever when launching in new markets. Sumsub CEO and co-founder Andrew Sever has used his expertise to create four essential tips for helping crypto businesses scale affordably with the help of automated KYC solutions.
Compliance with Anti-Money Laundering (AML) regulations is essential for new and existing crypto businesses. The world is officially taking a closer look at crypto, so businesses can’t afford to cut corners regarding Customer Due Diligence (CDD) protocols.
Because of this, it’s important to have a robust and reliable Know Your Customer (KYC) solution. While it’s true they require an upfront investment, CDD and KYC tools are necessary for compliance and streamlined scaling. Choosing the right solutions ahead of time means crypto businesses can easily comply with regulations in new markets and adapt to different standards as needed.
Here’s how KYC providers can collaborate with crypto businesses to create affordable, scalable solutions.
1. Adapt your product to appeal to local customers.
Aside from helping to overcome regional obstacles, KYC providers can also help crypto businesses capture a greater market share faster.
This is done by creating a control dashboard that allows the company to customize aspects of the customer journey to suit the market better.
As an example, not all countries have high-speed internet. A business with this information could easily use a KYC solution to adjust for a more straightforward interface that loads faster or a more streamlined verification process.
Adapting to other factors like language, risk profiles, and regional differences with a sophisticated KYC solution makes an expanding crypto business more appealing in new markets. This level of flexibility also offers a competitive edge.
2. Determine when additional measures are appropriate to mitigate fraud.
Some markets pose a higher risk of fraudulent or illegal activities. The only way new crypto companies can successfully expand is to enter these markets with eyes wide open.
In these cases, KYC providers can help businesses customize their customer onboarding flows to account for and mitigate some of this risk. Not only do KYC companies know which countries pose a more significant risk, but they have solutions already in place to ensure businesses are meeting or exceeding AML standards.
Crypto businesses can take advantage of extra security protocols like liveness detection, transaction limits, more in-depth document checks and additional data requests during the verification process. These steps significantly reduce the risk of fraud, terrorist funding, and other illegal activities.
3. Know regional regulations before you launch.
Every region has different requirements, and some are much stricter than others. It’s vital to know what the crypto regulations are in your chosen market well ahead of launch.
For example, Latin America does not yet have a fully developed set of crypto regulations. This means the restrictions are much looser. If a crypto business from that region hoped to expand into the EU, it would need to know just how strict the AML rules are for that region and plan accordingly.
This is where it’s beneficial for expanding crypto businesses to work with a professional KYC provider. Professional KYC creators can craft an onboarding system capable of handling regional differences easily and efficiently, which takes the stress and extra cost off the table for these businesses.
For instance, Sumsub developed a bespoke solution for a client that covered customers from Europe, Asia, America and the CIS. Because each region varies and compliance rules are in constant flux, it is especially helpful if your KYC provider keeps an in-house team of specialists who deal specifically with compliance assistance and improving the automated solution.
4. Be prepared to handle local document quirks.
Crypto businesses frequently have difficulty keeping high pass rates in countries with atypical document rules.
When it comes to what’s acceptable documentation, there are countless region-specific nuances that can be difficult to keep up with. For instance, while it’s generally unacceptable to provide expired identification for onboarding, in Brazil, an expired driver’s license is considered legally valid for identity verification, so it must be accepted.
Countries like Turkey also present unique challenges. There are instances where two people can have the same driver’s license number, which means the system would incorrectly reject a person because of the duplicate number.
To get around these regional quirks, KYC providers like Sumsub can provide unique features that automatically adjust the existing verification process. Other features, like optical character recognition, can make processing unusual document formats quick and easy.
The question for crypto businesses is not if they should invest in KYC tools but which KYC solution provider is best for their needs. The best providers can create and maintain dynamic solutions that quickly adapt to regional specifications.
A better, more streamlined verification flow is essential for scalability and compliance, so crypto companies should choose a KYC solution with high standards and innovative features to help the business grow.
About the Author
Andrew Sever is the company’s Chief Executive Officer, Andrew leads Sumsub’s operations, business development, sales, and global expansion. In the seven years of managing Sumsub, the company has acquired over 1,000 clients in 197 countries, and now verifies millions of identities every year and became the world’s top 2% SaaS companies based on its ARR.