High-Risk Customer Identification involves recognizing individuals or entities that pose greater risks in terms of financial crime, fraud, or money laundering. In the cryptocurrency space, this process is crucial due to the pseudonymous nature of transactions and the potential for abuse.Factors that can categorize customers as high-risk include geographic location, transaction behavior, and involvement with certain high-risk industries. For example, individuals from jurisdictions with poor regulatory oversight or a history of financial crime may be flagged for closer scrutiny.To identify high-risk customers, exchanges and platforms often implement Know Your Customer (KYC) procedures, requiring users to provide identification and undergo background checks. Continuous monitoring of transactions also helps in detecting unusual activity that might indicate suspicious behavior.By proactively identifying high-risk customers, businesses can better protect themselves against financial penalties and reputational damage while ensuring a safer environment for legitimate users. This practice is part of broader efforts to enhance compliance and foster trust in the system.