KYC is a common regulatory requirement, which financial service providers are required to comply with. These controls mainly combat the financing and money laundering of illicit activities. KYC is a key measure in anti-money laundering regulations, making it an important security tool, especially in the cryptocurrency industry. Financial institutions and service providers must increasingly implement robust KYC procedures for the security of their customers and assets.
In addition to verifying a customer's identity, it is also important to confirm their location and address. Your identity documents will provide basic information such as name and date of birth, but more information is needed to confirm your tax residency, for example. You will likely need to complete more than one KYC step. Financial service providers often need to re-verify the identity of their customers at regular intervals.

KYC regulations vary by country, but there is international cooperation regarding the basic information required. In the US, the Bank Secrecy Act and the 2001 Patriot Act established most of the processes related to the current anti-money laundering (AML) policy and KYC verification. European Union and Asia-Pacific countries have developed their own regulations, but there is a lot of overlap with the US. The AMLD (Anti-Money Laundering Directive) and PSD2 regulations provide the main framework for the countries of the European Union. At the global level, the FATF (Financial Action Task Force) coordinates multinational cooperation on regulatory conditions.

KYC requires more time to set up an account, but it certainly offers benefits. Average users won't necessarily be able to notice these benefits, but KYC has a significant impact on keeping your funds safe and fighting crime.

Usually, governments and regulatory bodies require brokers/exchanges to complete KYC checks of their customers. Although it is very difficult to implement the mandatory KYC for cryptocurrency wallets, it is a suitable process for fiat-to-cryptocurrency exchange services. Some investors are more interested in speculation regarding cryptocurrencies. Others more actively appreciate its core values and usefulness.