Verification Rules Platforms Must Apply to Customers

Customer due diligence is the obligation customers actually experience. It has four components and they are standard internationally.

Component one: identification

Establishing who the customer is, from a reliable independent source. For an individual, a government-issued identity document. For an entity, constitutional documents and registry evidence.

In plain terms: the platform must know your name and be able to prove how it knows.

Component two: verification of beneficial ownership

For an entity, identifying the natural persons who ultimately own or control it, usually above a percentage threshold.

This binds the platform, which is why corporate onboarding asks about shareholders who have no involvement in the account.

Component three: purpose and nature of the relationship

Understanding what the customer intends to do. This is why onboarding asks about expected volumes and sources of funds.

A later transaction inconsistent with the stated purpose is what triggers review.

Component four: ongoing monitoring

Continuing scrutiny of transactions against the expected pattern, and keeping the information current.

This is why a platform asks for an updated document years after onboarding.

When enhanced measures apply

Higher risk situations: politically exposed persons, higher risk jurisdictions, unusual patterns, and transactions above thresholds. The response is more documentation rather than refusal.

Why a platform cannot simply waive it

Because the obligation binds the platform and is enforced against it. A platform that onboards without checks is not being accommodating; it is in breach.

A venue asking for nothing is telling you something about itself.

What this means in practice

Prepare documents in advance, expect questions proportionate to the amount, and answer completely in one submission.

Exchanges that already meet the verification requirement process a prepared application in minutes. Platforms that collect the documents the regulator expects ask once rather than four times, and Collect & Exchange states what is required before you begin rather than during.