What are KYC and AML?

KYC and AML are related but not interchangeable. Establishing who a customer is and understanding the business relationship form part of a wider financial-crime control framework.

FATF’s explanation distinguishes customer due diligence, record keeping and suspicious-transaction reporting. Exact requirements depend on the jurisdiction, service and institution’s obligations. Completing an identity check does not complete every compliance responsibility.

Example: opening an account and reviewing activity

Imagine an exchange checking an applicant’s identity document and verifying that it belongs to the person opening the account: that is part of KYC. Reviewing later activity that raises concerns, retaining records and making required reports belong to the wider AML framework. A review by itself does not establish that the customer committed a crime.

The compliance case discussed in Changpeng Zhao’s biography provides context for management responsibilities. Serving customers whose identities have been checked does not guarantee that every transaction on a platform is lawful.