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The main reason why ICO funded companies are having trouble opening their bank accounts

Finance / Technology / August 8, 2018

In 2018 ICOs are becoming more casual ways to collect funding for ideas. With every new technology that’s disrupting the world, we need to think about the regulations.

What’s KYC/AML and why it’s needed for an ICO?

Although the phrase “KYC – Know Your Customer” & “AML – Anti Money Laundering” may seem trivial to a lot of people, it has a very important meaning in the financial world.

KYC is an important practice in business and finance, as it allows institutions to ensure that their clients are not involved in money-related crimes. It’s essential for ICOs to ask their investors to go through a KYC/AML process for preventing a start-up from getting involved in corruption, terrorist financing, or money laundering.

KYC is a defensive mechanism for both the company and the investors. By sharing this data, all token holders confirm that they are the true owners of their personal accounts and wallet, to which the company sends tokens to. It will grant that you are the verified person that receives your tokens.

1. Make your ICO regulatory compliant

Financial institutions are strictly regulated in regards to financial crime. Because they play such a central role in the financial sector, they are given the responsibility of reporting suspicious activity and helping to ensure that money laundering does not occur. KYC is necessary for ICOs to properly meet this responsibility.

2. Open up a bank account for your ICO without a hassle

One of the biggest problems for ICOs is to convert their collected funds into dollars or euros (Fiat). The reason is because it’s tricky for companies that have collected funding with Initial Coin Offering to open up a bank account. It’s not like most of the banks aren’t interested in your money, but they simply can’t accept your funds if you have collected them by Bitcoin, Ethereum, Monero or in other crypto due to regulations.

For the startup to be a legitimate partner to public bodies, larger enterprise or financial institutions, you need to be sure that the sources of all funds raised during the token sale are legitimate. No funds can come from illicit sources, people under sanctions, or organizations with terroristic links. Having a quality KYC process in place will make it accessible for your company to open up a bank account more easily.

Read also: Technical guide for funding your startup by launching ICO: 

3. KYC will help your ICO to get rid of scammers

For example in the USA, it’s illegal to have multiple accounts for ICO.

There are different ways that people are trying to scam ICOs. One way is mostly due to different perks of a bounty campaign, where they get extra rewards for completing different tasks like signing up for a crowdfunding campaign. By asking your contributors to go through a KYC process at the end of ICO, before releasing your tokens to the investors, it will eliminate multiple account participants and ensures that only real contributors get the tokens.

Should you build your own KYC/AML process or use a service for that?

Some business owners might be thinking: ”It’s just a form where I’ll collect some data and a couple of pictures, what’s so hard about that?” True. Although, if you find yourself in a situation where your ICO is used for money laundering or hacked for personal information with documents held on your servers, you might hope that you collected more funds.

On the other hand, investors are reluctant to give their highly personal information to new crowdfunding projects. There have been some scams where ICOs were conducted to only steal identities. These cases have made investors more cautious, now they are looking for ICOs that have a highly known and trusted third party KYC provider, so they know that the ICO isn’t storing their passport, ID card or driver’s license details on their servers.

What if you could start your ICO without technical headaches, with integrated professional KYC system that banks and other financial institutes use? It’s not hypothetical anymore, because there is a solution. ICOVenture has partnered up with the most reliable KYC/AML service provider Veriff to help ICOs collect funds, while making sure that the collected funds are all legal. Although ICOs receive the confirmation and certainty that all KYC requirements are met as strictly as possible, sensitive personal data is processed by Veriff and isn’t forwarded to any other side. This enables to decrease the potential perception of distrust. The necessary verification services are offered by Veriff, which is likely to become a worldwide standard for building up trust in the internet. We would like to make ICOs a worldwide standard for collecting funds. The only way of pursuing our mission as a platform is doing no compromises on trust.


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Kenn Lend
I just love building new companies! I'm a total nerd when it comes to optimizing our daily lives and growing startups. Creating growth is all about understanding customer, user behavior, market dynamics and combining it with Imagination. Our Goal in ICOStream is to help companies to launch the most successful crowdfunding campaigns throughout the history. ICOStream is providing startups with technology from campaign's landing pages to security audited ICO platforms and blockchain solutions. We are not only limited to technology, as we have launched previously ICOs that have been wildly notorious and successful, we will also bring to the table vast expertise and battle scars. Give us a call and we can make a game plan how we can help your startup to reach the true potential




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