DeFi and privacy - balancing transparency and data protection
In traditional banking, user identification is standard practice but the specifics of transactions are typically kept confidential. In decentralised finance (DeFi), user anonymity is maintained and all transactions are publicly visible. KYC and AML regulations are designed to align with the principles of user privacy and open access in DeFi, and as Deloitte reports: “Almost USD 5bn in 2022 for anti-money laundering (AML) issues, sanctions breaches and deficiencies in their know your customer (KYC) systems, bringing the total since the global financial crisis to almost USD 55bn”
Five largest AML fines in 2023 to date
Source: Sumsub.com
What exactly is KYC?
Know your customer (KYC) is a process that organisations use to confirm the identities of their clients and to evaluate any associated risks in doing business with them. Its goal is to prevent illegal activities such as money laundering, funding of terrorism or other nefarious activities. When a consumer wishes to conduct business with a…
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