Investigative journalist Joseph Cox recently exposed significant flaws in the know-your-customer (KYC) and anti-money laundering (AML) procedures of cryptocurrency exchange OKX.
In a report for 404 media, Cox detailed how he created a verified account on OKX using false identification, passports, and other fabricated legal documents. This revelation raises concerns about the effectiveness and stringency of OKX’s customer verification processes.
The investigative story not only highlights the ease with which fake identities can pass through KYC/AML checks on OKX but also suggests a broader failure in adhering to regulations governing digital financial institutions.
The absence of proper identity verification before allowing deposits is a violation of standard procedures observed by most financial institutions, aiming to prevent the acceptance of illicitly acquired funds.
Protos, following up on Cox’s findings, contacted OKX’s customer support on Telegram. Contrary to standard industry practices, the support team confirmed that OKX does not conduct real KYC/AML processes during the account creation or deposit stages. The exchange allegedly only performs these checks when users attempt to withdraw funds. This approach is not only illegal but raises serious concerns about the platform’s commitment to preventing money laundering.
OKX’s customer support defended its procedures by suggesting that other exchanges worldwide follow a similar model, claiming that every exchange operates without a robust KYC/AML system during initial user interactions. However, this explanation did not address the legality and morality of such practices.
The expose has sparked discussions around the adequacy of KYC/AML procedures on cryptocurrency exchanges, with them facing scrutiny for its lax approach to customer verification. The findings may prompt regulatory bodies to investigate and enforce stricter compliance measures in the cryptocurrency space.