As talk of binary options regulations grows even more important in the changing landscape of the trading industry, it’s important to understand one common phrase that you’ll probably hear over and over: KYC, or Know Your Client.
“Know Your Client” policies are becoming more and more popular throughout the entire financial industry, because they help protect against the specific types of crimes that can happen in a largely digital industry. Identity theft, fraud, and money laundering have all become prevalent in the trading world. Because of this, most brokers have set multiple KYC regulations into place (also called anti-money laundering regulations, or AML regulations).
When an investor wants to make a withdrawal, their identity will have to be confirmed. This can make the withdrawal process lengthy, and it may feel like overkill on the side of the investor, who just wants to receive their money and move on. But the identity confirmation regulations behind the wait are keeping binary options trading safer in the long run.
Prevention, Regulation, Enforcement
The binary options regulations that are in place do three things to protect against money laundering. Through “Know Your Client” rules, the industry prevents the crimes in the first place, and regulates and enforces consequences for those who do break the law. The prevention leg is the part that most investors are familiar with: the long wait to receive your payout while your identity is confirmed. If funds connected to an individual are easier to track, it’s far easier to catch criminals before they strike. Typically, brokers will ask for information such as:
- Copies of your driver’s license.
- Copies of your passport.
- Copies of the cards that are connected to the account you’re using to deposit funds.
- Copies of a recent bill to prove your address.
- A history of your online transactions, in order to trace your activity.
These documents help ensure that fraud is stopped in its tracks, and keep binary options trading as profitable for everyone as possible.
Money Laundering
While understanding what “Know Your Client” binary options regulations are for, and how they work, is easy enough, it doesn’t always help stop the frustration that can come with a delayed withdrawal. It may help to consider what money laundering actually is, and how it harms not only the industry, but also the economy at large.
Money laundering is a way of covering criminal tracks. In basic terms, it’s a false trail that a criminal creates to make it appear as though income has come from a legal activity or source, when in reality that income was earned through an illegal method.
Because binary options trading is a zero sum game – meaning that what one trader loses, another takes home, and vice versa – the industry can be thought of of as a giant pot, shared by all investors. Any money that a criminal introduces to the system, and then removes again with its new trail, falsely inflates the pot and affects payouts. And for the economy in general, money laundering weakens the financial landscape, which is one of the strongest affecters of the economy across the globe. By harming financial institutions, money laundering directly causes bad economic trends.
Waiting for your money is never fun, but these binary options regulations are in place to protect you in the long run. By preventing the serious consequences of money laundering, “Know Your Client” regulations are helping to keep binary options trading profitable for all involved, and helping to protect the global economy.
For more information:
https://www.facebook.com/onetwotrade
https://twitter.com/OneTwoTrade
Meta Title: How KYC Regulations Prevent Money Laundering
Meta Keywords: know your client, money laundering, binary options regulations
Meta Description: Learn why Know Your Client binary options regulations may lead to longer wait times for withdrawals, and why that’s not necessarily a bad thing.