KYC and AML process at a US regulated Exchange

Almost all unregulated Exchanges around the world are onboarding clients online with new innovating onboarding softwares. This proces is fast and cheap, but is it also secure?

In the last centuries, our Governments (Democratic chosen) made a lot of rules to avoid scams, we can’t just let those rules at the sideline, almost every rule we have, are there with a reason, and that’s for protecting you from scammers. We’ve put some of those rules from FINRA US below.

What is an AML Compliance Program?
The Bank Secrecy Act, among other things, requires financial institutions, including broker-dealers, to develop and implement AML compliance programs. Members are also governed by the anti-money laundering rule in FINRA Rule 3310. FINRA Rule 3310 sets forth minimum standards for broker-dealers’ AML compliance programs.

Are all broker-dealers subject to the Bank Secrecy Act?
Yes. The Bank Secrecy Act applies to all broker-dealers. There are no exceptions. Firms should recognize, however, that AML compliance programs can and should be tailored to fit their business and risks, considering factors such as size, location, business activities, the types of accounts they maintain, and the types of transactions in which their customers engage.

Does the AML compliance person have to be a registered principal?
Under FINRA rules, a member’s compliance personnel are required to be registered if they are performing a function that expressly requires registration. For instance, FINRA Rule 1220(a)(3) requires that each person designated as a Chief Compliance Officer as specified in FINRA Rule 3130 must register with FINRA as a Compliance Officer. Neither the Bank Secrecy Act nor FINRA Rule 3310 expressly require designated AML compliance persons to be registered with FINRA. To the extent that a designated AML compliance person is engaged in other activities or functions, firms should review the applicable FINRA rules to determine whether such other activities or functions require registration.

While the designated AML compliance person is not required to be a registered person solely as a result of serving that function, some firms may choose to register such individuals. Firms should also note that, regardless of the designated AML compliance officer’s registration status, such individuals are considered associated persons. (See NASD Notice to Members 02-80, fn.5NASD Notice to Members 06-07.)

How long must a firm retain customer identification records?
A broker-dealer must retain records of all of the identification information obtained from the customer for five years after the account is closed. In addition, records made about information that verifies a customer’s identity only have to be retained for five years after the record is made. In all other respects, the records must be maintained pursuant to the provisions of SEC Rule 17a-4. (See NASD Notice to Members 03-34.)

What is a “reasonable time” to verify customers’ identities before or after the customer’s account is opened?
The term “reasonable time” is not defined by the rule. The Adopting Release emphasizes that broker-dealers must reasonably exercise the flexibility to undertake verification before or after an account is opened. The amount of time may depend on various factors, which are part of a firm’s risk assessment.

Verifying an account at a regulated Exchange can take a while, 3 to 30 day’s. But you’ll never have to be concerned about getting rekt. Your transactions in fiat, crypto, NFT’s and security tokens will be secured by those Exchanges. Be Safe ! and chose wise your Exchange.

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