Two acronyms
- KYC = Know Your Customer.
- AML = Anti-Money Laundering.
KYC is "who walks in"; AML is "what they do once they're in".
Bank analogy
A bank takes your ID and proof of address to open an account or process transfers (KYC), then monitors transactions to flag suspicious activity (AML). OTC shops follow the same playbook, with crypto-specific tools.
Standard KYC steps
- Cash trades: KYC is required when the amount is over HK$120k equivalent; smaller cash trades may still need extra information if risk signals appear.
- Bank-transfer trades: KYC is required regardless of amount.
- ID card / passport + proof of address (utility bill within 3 months).
- Source-of-funds declaration (salary, savings, business income, inheritance…).
- Large or higher-risk trades may require bank statements, proof of wealth, or Enhanced Due Diligence (EDD); Politically Exposed Persons (PEP) also receive enhanced checks.
AML tools an OTC shop uses
- KYT (Know Your Transaction): Chainalysis, SlowMist, OKLink to cross-check addresses against sanctions, hacker wallets, mixers.
- Anomaly monitoring: amount, frequency, structured-trade alerts.
- STR: Suspicious Transaction Report filed with the JFIU within statutory deadlines.
Why customers should comply
- It is a legal and risk-control requirement: cash trades over HK$120k equivalent and all bank-transfer trades require KYC before the shop can proceed.
- Receipts protect you when a bank or the IRD asks about source of funds.
- Healthy industry: dirty money in → banks restrict all crypto users.
UX tips
- If you plan to use bank transfer, or your cash trade may exceed HK$120k equivalent, bring ID and proof of address copies.
- For large or higher-risk trades, give the shop one day's notice for EDD docs.
- If declined, the address or funds path likely tripped a risk signal — ask why; don't shop around for a non-compliant venue.
A shop that skips KYC when KYC is required is high-risk. Don't take the shortcut.
