What is Know Your Customer or KYC? : Its Process and Benefits
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What is Know Your Customer or KYC? : Its Process and Benefits

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What is Know Your Customer or KYC? : Its Process and Benefits

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Know Your Customer or KYC is a process that must be done by all financial service users when registering.

 In the financial sector, KYC has become a standard and ethical requirements for identifying potential customers.

 The important role of KYC is found in the smooth process of online financial services. However, there are still many people who feel restless when they have to go through this process, they don’t even know what KYC is.

 To find out more about this financial service term, check out the review below.

Understanding KYC 

KYC is a policy implemented by financial service agencies in an effort to verify the identity and monitor the transaction activities of its customers.

An important role in implementing KYC is seen in customer registration, for example at a bank. The goal is to ensure that the information contained in the customer’s account is true and authentic.

The current financial service customer registration process uses KYC financial technology. The implementation of KYC itself, can be a way to avoid corruption, money laundering, and other criminal acts as well as an effort to secure customer accounts.

It is also important to know, if a financial technology product/service does not use this process, it is likely that the customer, user, or consumer will fall victim to irresponsible people who will take advantage of the lack of security of their transactions.

Legal Basis of KYC in Indonesia

As a technology program used by financial institutions, KYC has also been legally supervised.

The following are some of the legal basis on the implementation of KYC in Indonesia:

  1. Law No. 8 of 2010 on Prevention and Eradication of Money Laundering.
  2. Minister of Finance Regulation Number 30/PMK.010/2010 on Application of Know Your Customer Principles for Non-Bank Financial Institutions.
  3. POJK Number 12-POJK.01-2017 on Implementation of the AML-CFT Program in the Financial Services Sector.

Benefits of KYC

Currently, KYC has been implemented by almost all financial institutions or industries in Indonesia. The implementation of KYC is carried out to ensure security of transactions carried out in the financial institutions and data protection of all their customers.

Apart from the above, here are some other benefits of KYC:

  1. For companies, KYC really helps them to get to know more about their customers.
  2. It helps the company to understand the nature and activities of customers.
  3. Assessing anti-money laundering risks by monitoring customers’ activities.
  4. Provide protection from losses and fraud due to unreasonable and illegal fund transactions.
  5. Faster and cost-effective customer identity verification process.

The Importance of KYC in  Crypto Industry

Why is KYC necessary, especially in the crypto industry?

It’s because the crypto asset industry, especially the crypto marketplaces, want to make potential users of its exchange platform as clients/customers of their company.

Hence, the company make policies to increase trading frequency of its users. In this case, KYC will help crypto asset companies to ensure that their platform services are used for transactions that do not violate the law.

One of the important things is to prevent the transaction from illegal practices such as money laundering. Moreover, KYC will also help companies to ensure that users of their platform or services are not fictitious accounts.

In addition, the identification verification stage in the KYC process will also protect the company’s business from losses that arise from existing regulatory loopholes. This process also provides a standard for companies to regulate their clients, considering that the crypto assets industry is dynamic and easy to adopt new standards.

For the community, the KYC process will help them increase their trust in crypto assets. Companies can minimize illicit activities that take place using crypto assets.

Documents Needed In KYC process

In the process, KYC will require several documents. In this case, the financial institution or agency will ask for complete data on their prospective customers. The following are the required data.

  1. For Individual Prospective Customers

  • Name of potential customer.
  • Population identification number (NIK) on e-KTP.
  • Identity document number.
  • Residential address in accordance with identity documents and other residential addresses.
  • Place and date of birth.
  • Citizenship.
  • Work.
  • Gender.
  • Marital status.
  • Source and purpose of use of funds.
  1. For Prospective Company Customers

  • Company name.
  • Business license number from the authorized agency.
  • Business fields.
  • Company address.
  • Place and date of establishment of the company.
  • Form of corporate legal entity.
  • Identity of the Beneficial Owner (the actual owner of the funds placed in the bank, controlling customer transactions, granting power of attorney to conduct transactions) if the prospective customer has a Beneficial Owner.
  • Source of funds.
  • The purpose and objective of the business transaction to be carried out by the prospective company  customer with the bank.
  • Other information to find out more about potential customers, including information ordered by other relevant laws and regulations.


For a record, Indodax also applies this important process for each of its members. The goal is to be able to reduce any risks that can endanger the security of the crypto asset transaction process of Indodax members, for example hacking or fraud.

For those of you who want to know how to do the KYC process on Indodax, below  are the steps.

1. Starting KYC

The first step, after you have successfully registered an account and verified your email at Indodax, you will see a KYC notification. Click “Start Filling in Personal Data”.

KYC on Indodax can be done via the Indodax mobile application, so you must download the Indodax mobile application after registering and verifying your email!

Next, you will see a page showing the three steps of KYC. When you are ready, you can click Start. For the e-KTP verification process, please enter your country of origin, then click “Take Photo” for the e-KTP photo.

Here, you can only use e-KTP, because currently, SIM and Passport are not recognized for Indonesian Citizens (WNI) to do the KYC process. However, if you are not an Indonesian citizen, you can use a passport, because, for now, KITAS/KITAP is not yet recognized for the KYC process. When it is successful then you can click “Finish”.

2. Fill in Personal Data

The next step, you can fill in all the required personal data. Remember, this is mandatory. This step is also very important so make sure that all information about yourself has been filled out correctly.

3. Face Identification 

The last step is the face identification. At this stage, make sure that your cell phone camera is functioning properly. In order for this process to be successful, make sure you don’t wear glasses, masks, and have sufficient lighting.

You must also follow directions to face right and/or left. The system will record your facial movements for the face identification process. This process is also very important in an effort to ensure the validity of your account.

Don’t worry, this face identification only lasts a few seconds so you also have to pay attention to the recording time. Next, if it is successful then you will see the next page and just click “Done” when all the processes have been completed.

If you have successfully completed the three KYC stages above, you just have to agree to the existing Terms and Conditions, by clicking the “Agree & Submit” button to complete this process.

Next you just need to wait for the Indodax team to process your KYC verification, no later than 1×24 hours.

Keep in mind that KYC is an important thing that you must go through. You can also follow the guide above when you want to do KYC on Indodax

Check out other latest articles about the world of digital assets only at Indodax Academy!

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