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 (KYC), then monitors transactions to flag suspicious activity (AML). OTC shops follow the same playbook, with crypto-specific tools.
Standard KYC steps
- HKID / passport + proof of address (utility bill within 3 months).
- Source-of-funds declaration (salary, savings, business income, inheritance…).
- Large trades (≥ HK$120k equivalent) trigger bank statements or proof of wealth.
- Politically Exposed Persons (PEP) get Enhanced Due Diligence (EDD).
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's the law — refusing KYC means the shop can't trade with you.
- 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
- Bring ID and proof of address copies.
- For large 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 with no KYC is not legal — and very likely a scam. Don't take the shortcut.
