KYC (Know Your Customer)

A regulatory framework requiring financial institutions to verify the identity, financial profile, and risk level of their clients before opening accounts or processing transactions. KYC rules exist to combat money laundering, terrorist financing, and fraud, and are enforced globally by regulators including FinCEN in the United States and the FCA in the United Kingdom. In the crypto world, KYC requirements on centralized exchanges have become a flashpoint in the debate between regulatory compliance and the privacy ethos of decentralized finance.