How to Prevent Cryptocurrency Account Takeover

by Bence Jendruszak
KYC, which stands for Know Your Customer, is sometimes mandatory, certainly useful, and often very expensive.
Let’s see how much it costs businesses exactly – and, more importantly, how to make it more affordable.
The cost of KYC is notoriously difficult to calculate. You have to take into account the manual hours, staff hires, and price of your compliance tools. The average salary of a KYC analyst, for instance, is $55,333/€52,640 per year, according to Glassdoor.
However, a whitepaper published by Consult Hyperion attempted to answer the question with concrete numbers. Here are their key findings:
The last point in particular should give you pause. Have you considered the hidden costs of KYC? Let’s delve into the topic below.
There is more to KYC costs than staff salaries and software pricing. You should also consider things like training costs, customer support (when KYC checks inevitably go wrong), and incalculable business losses due to customer dissatisfaction.
Put simply, this is what happens when your checks are too heavy-handed and make customers abandon your platform. To make matters worse, they will usually turn toward competitors with less stringent processes in place.
This is true of a variety of verticals and scenarios such as:
For businesses, it becomes a balancing act between security and friction.
Do you really want to be 100% certain that users are really who they say they are? Even if it means risking false positives and turning down potentially good customers?
Luckily, you don’t necessarily have to choose thanks to dynamic friction and pre-KYC checks. Let’s break it down below.
Whether you are legally mandated to deploy KYC validation or just do it to reduce fraud, let’s explore ways in which you can reduce the costs of each verification.
Let’s get one thing out of the way: KYC software isn’t cheap. But is it as expensive as having a whole team of KYC analysts on your payroll? Probably not.
Examples of price per KYC check you can get from a KYC software vendor
The other advantage of KYC software over manual reviews is of course that it can scale your checks as needed. You are unburdened by the limitations of staff working hours. KYC software runs 24/7 and tends to only be capped by your pricing (if you purchase it from a third-party vendor).
However, here again, you should be aware of potential hidden costs.
These may include:
Interested in KYC software? Check out our KYC provider comparison.
The best solution to reduce the cost of KYC checks might be to avoid them in the first place. A great place to start is to have a KYC checklist ready.
This is not as absurd as it sounds, provided you can know which users are worth onboarding or not. Let’s develop the idea further.
Imagine a user lands on your website and begins the signup process. You can immediately start gathering information. Let’s take a dramatic example, where:
Red flags should be raised all around. But let’s give them the benefit of the doubt and carry on with the onboarding process.
At this stage, they need to submit information such as an email address and phone number. Now, this is what you see:
By now, you should have reasonable doubts that this user will become a loyal customer. In fact, it is absolutely not worth continuing with the onboarding in this case.
Removing junk users in that way will certainly help you save on KYC checks – not to mention the long-term headaches of having to deal with fraudsters. And best of all, this strategy tends to be much more affordable than running standard KYC checks for every single user who wants to sign up.
Now let’s imagine that a user isn’t as clearly fraudulent as the one in our example above. Let’s say that some data points to suspicious activity, but it’s not enough to tag them as definite identity thieves.
This is where having the ability to calculate risk scores comes in handy.
Risk scores (or fraud scores, depending on the platform), can help with a kind of triage, where you can set thresholds to automatically ACCEPT, DECLINE, or REVIEW an application.
The REVIEW part is especially interesting because this gives you the opportunity to ask for more information.
The idea is simply to waste less time and resources on KYC checks that will be either valuable or obviously junk. You can allocate more effort to review applications that fall within a grey area, to streamline your processes and save money on KYC checks in the long run.
Machine learning and AI certainly are buzzwords in the world of identity verification and KYC, but there’s a lot to gain from the technology if you deploy it right.
In simple terms, a ML system should allow you to spot suspicious KYC patterns without the need for human intervention.
It is particularly useful when dealing with huge amounts of data, where even the most eagle-eyed KYC analysts would fail to spot connections.
Of course, AI isn’t sophisticated enough to provide full compliance analysis, but it’s certainly a step in the right direction if you want to save time and resources uncovering potential risks.
SEON is first and foremost a fraud prevention tool. However, its ability to uncover hidden user data makes it a fantastic solution to augment KYC or pre-filter users before a KYC check.
This means you can use it to:
These are precisely the kinds of use cases that saw companies like Mokka immediately slash KYC costs by 6%.
Best of all, we can promise an excellent ROI as you won’t have to worry about integration costs or paid support. All available with flexible short-term, cancel-anytime contracts and a free 30-day trial.
Interested?
Find out how to streamline your KYC workflow, save money on verification checks and keep good customers happy.
Discover Pre-KYC
There is no universally accepted method. Research shows that the price per check can be as low as $13, with some setups going as high as $130. The latter takes into account staff time and wages as well as KYC software costs.
KYC and compliance in general require companies to hire specialists, deploy software, and dedicate more resources to managing identity verification. To make matters worse, the KYC process can also add friction that drives potential customers away by creating churn.
While KYC software is a great first step, you can also deploy pre-KYC checks that help immediately filter out junk users – saving you on official, costly KYC checks. For instance, by looking at alternative digital data, you can start spotting bad users as soon as they begin the onboarding process.
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Bence Jendruszák is the Chief Operating Officer and co-founder of SEON. Thanks to his leadership, the company received the biggest Series A in Hungarian history in 2021. Bence is passionate about cybersecurity and its overlap with business success. You can find him leading webinars with industry leaders on topics such as iGaming fraud, identity proofing or machine learning (when he’s not brewing questionable coffee for his colleagues).
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