The acronym KYC is widely present in the world of financial institutions and also for sports betting platforms. The term stands for “Know Your Customer,” and this procedure aims to verify the identity of platform users.
This is one of the services offered by StarsPay, which provides a KYC provider. Through instant validation of user documents, client sites can ensure that everyone complies with best practices in compliance and anti-money laundering (AML), one of the main points of importance for KYC.
The procedure is mandatory for many companies dealing with financial services, being an important part of compliance, meaning the fulfillment of current regulations in each sector. For companies planning to operate with sports betting in a newly legalized market like Brazil, it is essential to stay up to date with best practices.
What Is the Importance of KYC?
The main objective of KYC is to ensure that each user is indeed a real person, with their identity and personal data known to the company. Thus, the importance of the process is to prevent fraud, money laundering, and other illegal activities, as it allows understanding who is accessing the platforms and their transactions.
KYC generally involves collecting basic information about the customer, such as name, address, date of birth, and identification number (like CPF in Brazil). Through the receipt and analysis of documents, it may also include verification of identity cards, passports, proof of address, and, in some cases, financial history. Other options like facial verification and biometrics have also gained popularity recently.
By verifying the identity of customers and monitoring their activities, financial institutions can identify and report suspicious transactions to the relevant authorities. This helps curb activities like money laundering and terrorist financing. Besides complying with current legislation regulations, companies avoid potential reputational risks that could occur if they were used for illegal activities.
Data Care
To protect themselves from potential fines from regulators or misuse by users, platforms require consumer data and monitor transactions. At the same time, users have the right to have their data protected and their privacy maintained.
Thus, one of the challenges of KYC is protecting this data from unauthorized access, leaks, or theft, which can lead to severe legal consequences. In Brazil, for example, the General Data Protection Law (LGPD) addresses this issue. Beyond legal issues, user trust in brands is also at stake, highlighting the importance of careful data handling.
