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KYC & AML for ICOs

ICO Knowledge Base

What is KYC (know your customer)

What is KYC?


A shortening of ‘Know Your Customer’ is a Customer Identification Process, which involves steps and process which assist in determining the true identity of the customer (beneficial ownership of accounts).


This process also helps an organization in listing down various other facts like the source of income/funds, nature of customer business, and more, which in return assist financial organizations like the bank in calculating far-sighted risks. These are few steps which help in saving various financial institutions and stay secured from criminal elements resulting money laundering.


KYC (Know Your Customer) is the platform on which the company operates to avoid shortcomings in operational, legal and reputation risks to the institution and the consequential losses by scrupulously following various procedures laid down for opening and conduct of accounts. Money laundering is involvement in any transaction or series of transactions seeking to conceal or disguise the nature or source of proceeds derived from illegal activities including drug trafficking, armed robbery, tax evasion, smuggling, etc. KYC guidelines are accepted internationally as an important anti-money laundering measure.


Key Elements of a KYC Policy


KYC Policy includes the following nine key elements:

1. Customer Acceptance Policy (CAP)

2. Customer Identification Procedures (CIP)

3. Monitoring of Transactions

4. Risk management

5. Training Program

6. Internal Control Systems

7. Record Keeping

8. Assessment and Review

9. Duties / Responsibilities and Accountability

What is AML

What is AML?


An acronym for ‘anti-money laundering’ is a term used by financial and legal industries to describe the legal control that involves financial/economic organization and other delimited entities to avoid, perceive and report money laundering activates.


AML Policy Objectives


The primary objective of the policy is to prevent the company from being used intentionally/ unintentionally by criminal elements for money laundering or terrorist financing activities. The policy seeks:

  • To prevent the criminals from using the company for money laundering activities
  • To put in place appropriate controls for detection and reporting of suspicious activities in accordance with the applicable laws and laid down procedures
  • To promote compliance with laws pertaining to financial sector
  • To eliminate the risk that the company will be used for illicit or illegal activities
  • To reduce the risk of government seizure and forfeiture of a client’s loan collateral when the customer is involved in criminal activity
  • To protect the company’s reputation
  • To minimize frauds viii. To check misappropriations ix. To weed out undesirable customer x. To avoid opening of accounts with fictitious names and addresses
  • To monitor transactions of suspicious nature
  • To ensure that employees of the company are adequately trained in KYC/ AML/ CFT procedures.


Understanding money laundering and financial terrorism


Tax evasion includes masking monetary resources so that the same can be utilized without the discovery of the illicit movement that created them. Financial Terrorism implies budgetary help too, in any psychological warfare or to the individuals who energize, design or participate in fear based oppression.

Tax criminals send unlawful subsidies through lawful directs keeping in mind the end goal to disguise their criminal beginning while the individuals who back fear based oppression exchange finances that might be legitimate or illegal in unique to cover their source and extreme utilize, which is to help Financial Terrorism.


Definition of Money Laundering:


Section 3 of Prevention of Money Laundering Act (PMLA) defines “the offense of money laundering” as follows:

“Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offense of money laundering”.


The process involves creating a web of financial transactions so as to hide the true nature and origin of funds. For the purpose of this policy, the term money laundering would also cover financial transactions where the end use of funds goes for terrorist financing irrespective of the source of the funds.

Top KYC providers for ICOs

Providers who we have worked with or have integrated into our platform:


Why you need a KYC/AML solution for your ICO

KYC stands for ’’Know Your Customer’’ is a Customer Identification Process, and it is a systematic analysis which determines the actual identity of the customer. So how does it work? Simple. All you have to do is send a scanned copy of an ID (passport, driver’s license for US citizens) and make a selfie, holding the document in your hands. This avoids the mistaken identity, ie fake identity.


AML is short for ’’Anti Money Laundering’’ by which legal industries get the control in order to avoid, detect and report money laundering.


Let’s look at ICOs in a global context. KYC and AML regulations differ from country to country. Some states, like China and India, are not allowed to join ICOs according to local laws. The US has their own peculiarities. The latest reports inform that the US Securities and Exchange Commission (SEC) is going to prosecute ICOs that were held without KYC procedures.


The benefits KYC brings

Since the biggest principles of the crypto world are anonymity, KYC goes against that. But by ensuring the transparency of transactions, it guarantees that the token sale is legitimate.

Here are the main advantages that come with implementing KYC:

• preventing scammers from participating in ICOs for malicious purposes;

• combating criminal acts (money laundering);

• ensuring the safety of investors’ assets;

• avoiding legal, tax and reputational issues;

• establishing credibility with banks.


Downsides to KYC

Like mentioned earlier, one of the key principals of the crypto world is anonymity. Why? Because of possible threats that may occur, if there is any leakage of data. And since the digital world is not a safe haven, the procedure may occur at different stages:

• before purchasing tokens – quite a popular option;

• before registration – a very rare option;

• before the output of tokens – the most tricky option. If refund happens, the project defines by itself how to execute it right.


Staying ahead of future regulations

It is impossible to predict with a surgical precision what the crypto market will be like, but there are certain opinions on what will happen. And it is imperative that projects teams should be constantly researching, and then predicting what is to come. One thing is for sure: one can always look at the past, and see what the future will be, as history tends to repeat itself. Meaning, it is possible to learn from the past projects and learn from the success and failures of well-established projects.


Increasing possibilities for adoption and liquidity

Although the KYC is important for initial compliance with existing regulations, it has become a major element of future adoption and integration. And even though the project was successfully completed by the ICO without a KYC check, doesn’t imply that it will succeed in the long run. All of this means that the KYC is just a step closer in fulfilling the intended steps of using the project teams tokens and really put the tokenomics in action.



In conclusion, compliance with KYC requirements can benefit both ICO fundraising efforts as well as user adoption post-ICO. It can also potentially have a positive impact on the long-term market cap and liquidity of a given token. Initially, the KYC compliance has been a time-consuming and expensive process. Now, the KYC has become simpler and less expensive.

And speaking of AML, implementation of KYC for ICOs is crucial. Its goal is to lessen the number of criminal activities and ensure the safety of token sales.


ICODashboard + KYC = The Ultimate Solution

How to run a proper Whitelist Campaign for your ICO

In 2017, there were 235 ICOs that raised approximately $4 billion. This number only includes the successful ICOs where the soft cap was reached. And since the popularity of the ICOs is only getting bigger and bigger, there are expectations that even more funds will be raised until the end of the year 2018. With the growing ICO market, a lot of projects are struggling to stay afloat, in the terms of the attention they need from the investors in order to succeed.

So planning, from the first day of your project, is critical.


ICO Marketing Verticals

Even though there are a lot of agencies that offer professional PR and Marketing advice and services, they are expensive. And whatever it is that you will be paying for their services, you might even have to pay additionally for a percentage of the total amount raised and a percentage from the tokens issued in the ICO.

And of course, the amount of money spent doesn’t necessarily mean that your ICO will even succeed, so in this article, we will try and include all of the necessities that could get your ICO more traction.


Let your community spread the word about your project

So what your goal here is to build an online community, to manage it and to create a high-value engagement among members. And once the certain ’’virality’’ is met, your community will be naturally steered towards promoting the content.

And one of the best things about an engaging community is that it doesn’t cost anything, and the way it operates is that the community can share your project on different platforms, such as Twitter or Reddit, and it could be retweeted numerous times, which generates thousands of views. And there you go, free marketing.


Make the media talk about you

The best thing for your project is to let it speak for itself in the long run. But at the beginning stages of development, you should do the talking. You should come up with an interesting story and share it with the media. The main goal here is to make your project more trustworthy, as the audience will learn something about it.


E-mail marketing

E-mail marketing helps you reach undecided investors and inactive subscribers through a win-back and re-engage email series. You can do this to new subscribers as well, making sure they stay engaged all the time.

And according to the national client email report of 2015, there is a possibility that for every $1 you spend on email marketing, you can expect an approximate return of $38.


Meet potential investors

Being in touch with your target market and understanding your customer/investor is crucial. You should participate in all of the crypto meet-ups, conferences, and seminars around the country. This will help you stay in touch with the current news and leads, spread the message and establish trust.

Trust is the most important thing for a successful ICO since there are still a lot of scams out there. Being trustworthy is what the investors want.


Proof of Care

Proof of Care is an approach to whitelisting for an ICO. It helps you generate referrals form early adopters, without the need for additional tokens or competing for interest through a bounty pool.


Bottom Line

Creating and executing a successful ICO is not easy to do. It requires a lot of preparation, in the terms of pre-planning and coordination of the marketing strategy. Your project should be trustworthy, and you need to create an engaging community in order to do so. Trust is what will attract as many investors as possible, it is the key element for your success.

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