Is the verification process standardised for each jurisdiction served by exchange?

Bitcoin Questions and AnswersCategory: QuestionsIs the verification process standardised for each jurisdiction served by exchange?

Reza Mostafid asked 1 year ago

This question pertains to the verification steps employed by exchanges:
Are the steps standard? …meaning that some official/government body prescribes the verification process for the exchange and the exchange merely implements them?
It could be that the exchange has different verification steps for different countries of residence:
For example exchange BITFAST implements verification levels V1 – V5 for its US users where V1 – V5 are as per the US Federal Buero for Crypto Securites (FBCS) requirements.
For its Canadian users BITFAST might require one of tiers T1 – T4 as per the requirements ordained by the Canadian Financial Office (CFO).
To summarize: Is the verification process standardised as above or do the steps vary from exchange to exchange?
( Obviously, BITFAST, FBCS or CFO are made up names to illustrate my point )

1 Answers
Steven Hay answered 1 year ago

Hey Reza,
Well, the relevant laws which must be complied with by exchanges accepting fiat are known as AML (anti-money laundering) and KYC (know your customer). Now, I believe those laws were developed under those names in the US but have now been adopted by many other countries, perhaps under different names. You should search the relevant country’s laws pertaining to these terms as that’ll will give you the best idea of the questions which exchanges must ask to remain compliant.
As far as I know there’s no fully standardised process, just the same checklist of necessary info. However, you may find differences between exchanges in how they obtain this info or rate its relevance, especially in terms of the trading limits they set for different verification tiers. The exchanges may also have slightly different interpretations of the relevant laws.
There are no governmental agencies dedicated to regulating fiat at this point, so things are very far from standardised. It does seem to be becoming the worldwide standard that the rather-more-standardised AML / KYC procedures must be followed by exchanges which deal in fiat money however.

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