What is KYC and why is this important?

What is KYC and why is this important?

You might have heard about this term and will definitely have seen it when you create a profile on our platform: the KYC procedure. KYC stands for Know Your Client. It’s a mandatory verification process that needs to be completed when creating an account on Max Crowdfund. You might wonder: why do you need this information about me? What is it for? In this article we will explain you everything about the KYC procedure.

What is KYC and how to complete it?

KYC is a global, standard verification requirement within the investment industry. This process is mandatory, coming from industry regulators. To be able to apply for a European licence, Max Crowdfund works with a payment service provider (PSP). The PSP is obligated to ask for a KYC.

The KYC procedure is a kind of introduction between Max Crowdfund and the platform user. Max Crowdfund would like to get to know its platform users. There is a lot at stake in the financial industry, and nobody wants identity fraud or criminals/terrorists making a profit on the platform by a loan.

The procedure only takes a few minutes and consists of a few steps. To start, you receive a few identity questions, for example, ‘what is your date of birth?’. At the second step, you fill in details regarding your living address, followed by the third step where you upload an identification document and a 3D selfie made by your phone (all the information about taking this selfie is explained during the process on the page). After completing this step, you have finalised the KYC procedure! If you are interested in reading more detailed information about how to go through the KYC process, you can visit this page.

Why is KYC important?

There are several reasons why it is important to work with KYC. Overall, can be said that a KYC procedure protects all stakeholders within the industry and it’s in the best business interest of an investment company or investor.

But why is it protecting all stakeholders? As mentioned at the beginning of this blog, the KYC procedure prevents fraud or suspicious activities in the banking sector. Let’s have a look at the point of view from the industry. With a KYC procedure, the payment service provider can make sure that Max Crowdfund is handling only legal payments. From the point of view of the platform user: the user will know that Max Crowdfund is not involved with any illegal payments. This way, a secure and trustworthy environment will be created.

Max Crowdfund also wants to protect their platform users by issuing a warning in case the platform user might not have enough knowledge yet about real estate crowdfunding. Crowdfunding is still quite new for many people. Before making the first investment, the platform user must submit an investment test to prove that the choice of investment has been well considered by the investor. In the future, Max Crowdfund wants to offer a calculation tool to its investors, so they can calculate a responsible amount to invest.

Summarized, the three main reasons to use KYC are:

  • Establish and verify customer identity
  • Assess and monitor risks associated with clients
  • Comply with legal or regulatory requirements

Interested in starting to invest in real estate with Max Crowdfund? Make your own account on this page!