Cryptocurrency exchange Binance has announced that all users will be required to undergo Know Your Customer (KYC) verification. In an announcement on its website, Binance explained that this was to improve user protection and in response to improvements in global compliance standards. This applies to new users creating accounts and existing users who have not yet completed KYC verification.
Existing users who only completed the “basic level” will now have to complete the “intermediate level” verification. This will allow them to access services such as cryptocurrency deposits, transactions, and withdrawals. They will be restricted to only being able to withdraw cryptocurrencies until they complete the KYC. This is expected to be rolled out in phases to maintain a proper user experience.
Changpeng Zhao, founder and CEO of Binance, said:
"User protection is an integral part of our DNA and core values. Our vision is to create a sustainable ecosystem that is safe for all participants. Over the past four years we have laid the foundation by investing heavily in user safety and protection, supporting law enforcement agencies around the world with high-profile investigations, and helping victims of cybercrime recover millions of dollars in stolen funds ( …) Our goal is to work more collaboratively with policy makers to improve global standards and discourage bad actors. ”
In the basic level verification, users must provide their name and date of birth. Moving to the intermediate level will require both new and existing users to provide passport details and upload a selfie for verification.
Binance Decision Driven By Regulatory Pressure?
It is unclear if the decision to improve their security is a direct response to recent widespread criticism of their security policies and measures. In recent weeks, banks in Malaysia, Singapore, the United Kingdom, Italy, the Cayman Islands and Japan have cited a lack of compliance with local financial services policy.
On August 18, the Central Bank of the Netherlands (De Nederlandsche Bank or DNB) issued a warning against cryptocurrency exchange for operating in the country without the necessary license. According to the bank, Binance operated outside of anti-money laundering (AML) or terrorist financing legislation.
"Binance provides crypto services in the Netherlands without the required legal registration with DNB. This means that Binance is not complying with the Anti-Money Laundering and Terrorist Financing Act and is illegally offering services for the exchange between virtual and fiat currencies and is illegally offering custodial wallets. This can increase the risk of clients becoming involved in money laundering or terrorist financing ”.
In addition to the press release, Binance also tweeted about the new verification requirements.
"We are announcing these steps to redouble Know Your Customer (KYC) and Anti-Money Laundering efforts, which will further enhance user protection and combat financial crime." added the exchange.