Since the very inception of Forex trading, KYC (Know Your Customer) documents have been presenting challenges to both traders and brokers alike. These documents are often the one thing that stands between a prospective trader and the platform they need to use to profit from FX trading.
In this article, we’re going to talk about what these document requirements are, why brokers have always asked for them, and how you can now partner with brokers such as EagleFX in order to avoid having to trade off your personal information in exchange for access to a Forex trading platform.
KYC Documents Overview
The foundation of Know Your Customer documents is rooted in an anti-money laundering initiative that was put in place in 2014. The initiative’s goal was to battle money laundering, especially laundering on the part of those who wish to help finance global terrorism.
Clearly, KYC requirements stem from a very noble cause and as such, we cannot refer to them as a “bad” thing exactly.
What we can refer to them as is a challenge, simply because a surprising number of individuals do not have the identification and documents required to meet KYC requirements.
KYC documents are requested from a variety of financial institutions, such as banks, money lenders, and other businesses that deal with incoming and outgoing financial payments.
The document requirements include a legal, government-issued color photo identification card. This could be a passport, driver’s license, military ID card, or other official ID.
They also require proof of one’s residence and could be either a bank account or credit card statement, utility bill, telephone bill, or other official documents that show proof of residency.
This proof must be dated and must be dated no more than 3-months from the day that the document was submitted as proof.
Problems Stemming from KYC Requirements
As mentioned above, the reasoning behind KYC requirements is a noble one, but the problems that the requirements present are two-fold. On the one hand, the sharing of the documents puts one at risk of identity theft.
On the other, not everyone has them. There are a million and one reasons as to why one might not have one or both of the document types which are required and the fact of the matter is that brokers that adhere to Know Your Customer rules do not care why you do not have them, instead, caring only that you don’t.
Sharing your personal details presents its own set of problems, but when combined with sharing payment method details, the threat grows by leaps and bounds.
When funding an account via credit or debit card, or even by bank wire transfer, you’re going to have to share payment information. This could include card numbers, account numbers, or other information which is best left private.
Often, it is not the broker that requires that you share this information, but instead the payment processors and banks that work with the brokerage in order to accept deposits and issue withdrawals.
Issues with Credit/Debit and Bank Wire Deposits
When it comes time to make a purchase, most people immediately reach for their wallet or purse to grab a credit or debit card.
Some think nothing of entering their card numbers online, while others go to great lengths to avoid doing so.
When making a card deposit with a Forex broker, you will need to share not only the complete card number but also card information such as the expiry date and special CVV code from the backside of the card.
The broker may go one step further in asking you to send a photo of the physical card with all by the last four card numbers covered in order to help establish that you are in fact the owner of the card and payment account.
For larger deposits, in particular, bank wire transfers are often opted for. Wire transfers offer a more secure method of fund transfer but are of course the slowest of the available deposit and withdrawal options.
In some cases, you may be asked to send a wire transfer receipt to the broker, and this receipt may contain a substantial amount of personal information. It should be possible to blackout any private details that are not pertinent to the actual transfer, but even this might not be enough to offer total protection.
Wire transfers also tend to be costly. Even when the broker forgoes any wire deposit fees, the average wire transfer fee charged by a bank is around $30 per outgoing and incoming transfer.
Avoiding Know Your Customer Document Submission
The most important step to avoiding the KYC process completely will be to select a broker that allows you this right. The aforementioned broker, EagleFX, is one of the most reputable brokerages that now permit their clients to trade FX anonymously. Their registration process requires that one only submit their first and last name, along with their email address.
An email will be used to send important information to you, which includes confirmations, monthly activity statements, and much more.
Because of this, you’ll want to provide a real email address rather than a bogus one.
The next step will be to only deposit and withdraw using a cryptocurrency such as Bitcoin. With other payment methods, the broker is required to collect your KYC documents, but are at liberty to bypass the requirement when the trader opts to conduct all of their banking transactions by way of digital coins.
This step is completely necessary, so if you’ve never purchased cryptocurrency in the past, now is the perfect time to become familiar with them. The purchasing and submission processes are actually quite simple and even better, take very little time to complete.
There are a few potential problems with anonymous FX trading, but the bulk of these fall onto the broker. For example, allowing private trading means that the broker is unable to manage certain controls, such as the location of the trader.
Perhaps the broker doesn’t want to accept clients from China. By not requiring KYC documents to be submitted, they are much less likely to be able to control this. The same applies to a client’s age.
When identification is required, the broker can ensure that the trader does meet their age requirements. These are just two of the risks that the broker accepts when allowing for private Forex trading.
What about problems on the trader’s end of things? Well, this really comes down to the fact that no regulated broker is going to ever be allowed to accept clients into their platform without having them meet the KYC requirements.
They fully understand that they are missing out on a large segment of the market, but there’s really nothing that they can do to change that.
Who knows what the future may hold, but for now, there’s no immediate solution for regulated brokers who want to allow anonymous trading within their platforms.
The best-case scenario for those who wish to trade Forex privately is to select a trusted brokerage that allows it to do their trading with.
Brokerages such as EagleFX are beneficial not only in that they allow clients to trade completely anonymously, but they also offer the perks that all traders want, such as excellent platform conditions, high leverage, 24/7 interactive customer support, same-day withdrawals, low minimum deposit requirements, and much more.
Whether you want to protect your identity and payment information, or simply do not have the documents required to pass the KYC test, you now have a solid option for trading FX on your own terms.
Sign up and start trading 100% anonymously with EagleFX!
Disclaimer: The content of this article is sponsored and does not represent the opinions of Finance Magnates.