As the world becomes smaller and technologies more advanced, cases of fraud have skyrocketed. In the UK, fraud costs the economy a staggering £193 billion a year – equating to more than £6,000 lost per second every day. Meanwhile, in the US,the Federal Trade Commission received more than 2.1 million fraud reports from consumers in 2020,
Blockchain over the last half-decade has proven that the distributed ledger technology goes way beyond digital currencies. The value of blockchain in being able to reduce financial transaction risk, fraud and cost amongst multiple parties with a trusted, decentralized digital ledger; has not gone unnoticed or unused.
Blockchain technology offers integrity, traceability, transparency and of course, security. But is this enough? The rise of cryptocurrency and the development of blockchain fueled exchanges meant growth in money laundering activities.
In 2019, criminal entities laundered approximately $2.8 billion through crypto asset exchanges. Whilst banks have a heavily-regulated and distinct global system of legal protections and obligations, the crypto asset market isn’t as universally regulated, or protected. However, this is changing.
Importance of the KYC Process
Yotam Namir of Tech View, a compliance company, the digital and blockchain service, spoke of the importance of the KYC process in the prevention of fraud in the blockchain environment.
“Blockchain goes a long way to help solve the growing problem of fraud but for that can only be truly affected in the crypto asset space with a KYC ( Know Your Customer) process in place within a universally regulated environment.”
And also Yotam Namir said,
“We at Tech View aim to transform complex client onboarding and the overall compliance process into a simple and efficient solution to your business.”
Technology and Adoption Will Advance
Looking beyond the crypto asset market, once technology and adoption improves, the KYC will be fully fueled by blockchain technology.
Institutions and governments are embracing blockchain technology in fintech environments. El Salvador recently became the first country to make Bitcoin legal tender, and as each day passes by blockchain technology creeps further into our lives.
Preventing the growing menace of fraud in the blockchain environment, however, at present, requires a rigid and transparent KYC process, for the benefit of everyone.