What is KYC and how to research after a company?What is KYC and how to research after a company?

What KYC is and how to research after a company too is an important article as KYC means a process when financial institutions like banks and financial companies trying to get to know their client due your submitted information and due diligence.

However, this not working from the other side as how can you check whether a company real and legit as if it looks like real and legit, but still a scam. It is obviously a bit of risk when you start to do anything with a new company, or try to invest, but some still take those risks so in the following paragraphs I am trying to write some tips and advice regarding the topic.

What is KYC?

According to Investopedia

“Know Your Client (KYC) is a standard in the investment industry that ensures financial advisors can verify a client’s identity and know their client’s investment knowledge and financial profile. There are three components of KYC include

  • the customer identification program (CIP), imposed under the USA Patriot Act in 2001,
  • customer due diligence (CDD), and
  • ongoing monitoring or enhanced due diligence (EDD) of a customer’s account once it is established

The SEC requires that each new customer provide detailed financial information before opening an investment or banking account.”

KYC - Know Your Customer, business concept, process of a business verifying the identity of its clients and assessing potential risks of illegal intentions for the business relationship.
KYC – Know Your Customer, business concept, process of a business verifying the identity of its clients and assessing potential risks of illegal intentions for the business relationship

Key requirements of the programs

  • CIP requires a financial firms must obtain four pieces of identifying information about a client, including name, date of birth, address, and identification number,
  • CDD is a process where all of a customer’s credentials are collected to verify their identity and evaluate their risk profile for suspicious account activity,
  • EDD is used for customers that are at a higher risk of infiltration, terrorism financing, or money laundering and additional information collection is often necessary.

Regarding cryptocurrencies

According to Investopedia “cryptocurrency platforms to verify their customers would aline with financial institutions, and although not yet required, many crypto platforms have implemented KYC practices.”

What about the customer side?

We all see that companies can profile a client to meet the requirements regarding

  • personal identity and
  • risk,

but a client or customer can not profile a company unfortunately….

Be prepared

We all know about FTX and FTX scam.

Even if FTX was legit and a real company I myself never thought I should invest in FTX, but some people might though based on information they read they should.

Why am I saying this?

It is because around 2 or 3 years ago, when I have already tried out another trading platform I was thinking maybe I should look around and compare that platform with another.

Not every platform is a scam and I will not write any other name here, but what I will write down is

  • we always should look for the information what is not there.

Be better in research

Look for the information which is not there.

I already used or at least tried another exchange in that time, when I was thinking should I try another platform like FTX or not and I checked some for example FTX too.

However, in that time I did not check only the word like FTX, but checked

  • reviews and
  • words too which were not there.

This is what I did when I started to research after the platform for example typed into search engines words like

  • FTX
  • FTX reviews
  • FTX scam
  • Is FTX legit
  • FTX not working etc.
FTX arena, the arena named after FTX company.
Miami, FL, USA – January 2, 2022: FTX Arena in Miami, FL, USA. The FTX Arena is a multi-purpose arena, the home to the Miami Heat of the National Basketball Association.

So, whatever came to my mind, which could be a problem regarding a company like FTX and I got several search results that FTX is a scam and that was like 2 or 3 years ago not last year…

Hard to believe that something is a scam right? Especially if an arena was named after that company. Does not it sounds something like too good to be true?

Next to this I used different

  • browsers,
  • search engines, and
  • different regions to search, because that will really help you as it helped me too…

And yes I got results it is a scam, and the reviews were awful, people stated they are not able to withdraw their money so there were red flags.

Marketing and ads

If a company recommend itself usually you will see a lot of good article and reviews about that company especially in the first 5 to 10 search engine pages, and you will not read further, because who has time…

Yes these are marketing and ads.

Probably I do not have to say that means you need to search the information what is not advertised.

So in that case start to search after negative information which IS NOT there, because that will give you the real information what you are looking for…

Too good to be true

For example:

  • If the company has 20 reviews on one site and on another 2000 that is a too big difference…
  • If the company has 20 likes on one social media and on another 2 million that is a big difference….
  • If the company sold a lot of things but you not seeing ANY NEGATIVE REVIEW that is not right…

This all means something is not right, if something not right or too good to be true just leave it behind and rest in peace.

Know your company

We all know KYC is Know Your Client, but to be honest it should be there anything like

  • Know Your Company

too and if there is nothing like this then start to (RE)search after the real information which is not there


I am not saying negative information are always real but try to guess and compare with other sites too especially if you are looking for a trading platform, and anything related investments and money…

Companies need to be legit

Obviously every company need to be legit in some way.

The companies need to fit for

  • the rules of the country and
  • the regulatory bodies where they are operating and where they are selling their goods or provide their services.

Cryptocurrency trading platforms/companies

This might be not transparent first, but as we know a lot of cryptocurrency companies advertised themselves as companies where your assets are untrackable. Maybe your assets inside the system untrackable, but it should get into these systems somehow.

People used to forgot that a trading platform just as a real investment or trading company need to follow the rules, if they not following those rules, and laws, that means a company not legit.

Legit means that trading platforms are using KYC as a first step at least in the US, and if that company not from the US still meet with the country’s rules, where it registered and the international rules especially if that is a financial company, these rules are for example, anti-money laundering, anti terrorism, KYC and other rules regarding different

  • standards,
  • rules and laws

For example in the US regarding investments companies need to align with the :

  • The Financial Industry Regulatory Authority (FINRA) Rule 2090 (Know Your Customer) and
  • FINRA Rule 2111 (Suitability). Learn more about this here.

FINRA is an independent, nongovernmental organization that writes and enforces the rules governing registered brokers and broker-dealer firms in the United States. Learn more about FINRA here.

Would you trust your investment to a company, which is not legit?

Probably not.

So before you make any investments, you need to be sure that a company is

  • real,
  • legit, and
  • have the necessary licence and permissions to operate in a country you are and/or internationally.

Probably to operate internationally they need to have the necessary

  • international licence too, and permissions and
  • they have to meet the requirements and rules.
KYC is an important part of the investment process
KYC is an important part of the investment process

For example

  • AML (Anti-money laundering) rules. AML is a term for the range of measures and processes used to achieve regulatory compliance. KYC is a component of AML. Read more here (https://www.justice.gov/opa/pr/ohio-resident-pleads-guilty-operating-darknet-based-bitcoin-mixer-laundered-over-300-million) about Helix, which was a bitcoin mixer company. It was operated on the dark net between 2014 and 2017, which is why the person who operated that company “sentenced at a date to be determined and faces a maximum penalty of 20 years in prison, a fine of $500,000 or twice the value of the property involved in the transaction, a term of supervised release of not more than three years, and mandatory restitution.

The supervisory body, which supervise these kind of compliance in the US is the

  • U.S. Financial Crimes Enforcement Network (FinCEN).

This is an example what you need to look for if you ever want to trade somewhere. You need to have some basic knowledge about basic things to be sure, that a company is

  • real,
  • legit,
  • meet the compliance rules,
  • meet the KYC rules, AML and anti-terrorism rules,
  • check reviews, and
  • information which are not there.

I am not saying that is a 100% sure process, but at least you have an idea what to look for, when you see only good things.

Cryptocurrency platforms and KYC

According to Investopedia

“Governing bodies are looking for ways to impose KYC on cryptocurrency markets.

Requiring cryptocurrency platforms to verify their customers would aline with financial institutions, and although not yet required, many crypto platforms have implemented KYC practices.

This means if a company ask KYC to verify your identity it means it might have a chance it is a legally registered company, however that does not mean that the company operations legal.

So, just because they have a KYC verification that does not mean the company work well and your investment not in danger, you still have to do your job, check reviews etc. etc. etc.

Check the process

This means before you start to trade, check the process how you

  • make a deposit, and
  • how can you withdraw it.

I have seen a scam from outside where a trading platform should have to work with automatized processes and systems, but is was manual, which means someone like an “account manager” will tell you what to do and if you are doing the things someone saying that means that person is leading you.

That is the easiest way

  • to be scammed or
  • lose your accounts, not just trading, but social media accounts too.

So whatever anyone say always try a deposit, with let’s say 3 EUR, that is not a too big amount to lose, you need to deposit this, and withdraw and you might los 1 or 2, because of the transaction costs. If you can not deposit, AND withdraw then no sense to start to trade with that company. If the account manager will tell you, you need a bigger amount just stop the conversation and block them.

You need to know how

  • your money get into the system, and how you can take it out aka withdraw it.

KYC is a part of a process just like deposit and withdraw do not forgot to check them.

Most trading platforms, which advertised in social media usually a scam, do not even try them. Account managers who are financial brokers, or crypto brokers usually scammers. Always check the company and do not trust in anyone. Obviously you can try to trust but I do not recommend to trust in someone who knows the system, which you are not and the process what you do not.

If you really want to try, try with the least amount with possible and with a big name company to at least have an idea how does it work.


What you never need to forget the risk, which is involved regarding any investment you make, so if you decide you want to invest at least have an idea about

  • the steps how the deposit, and withdraw working with the smallest amount (and if anyone tells the smallest amount is 100, 200, 500 or 1000 USD just block them immediately, because it is a scam),
  • the regulatory bodies,
  • the country’s rules and requirements and
  • the international rules and requirements

regarding investments if you want to invest to avoid bad experiences.

Hope this helps.

Article written by Reka A. Sz.

By Silk and Cake

Hi, Silk & Cake is my new blog about design, experience, entertainment, business, travel, fashion, and LifeStyle.

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