Bitcoin Forum

(Copied from the Trading Discussion forum for greater visibility)

Hi Everyone,

My name is Dylan, and I work in Mt.Gox's Compliance Division. Our division is responsible for handling the Anti-Money Laundering (AML) and Know Your Customer (KYC) activities for Mt.Gox, and we thought some of our users and the wider community might be interested in having an insight into how the whole process works. For those who may not be aware, AML/KYC checks involve us collecting from our users one piece of photographic identification, and one proof of residence document to help us identify you. Once you've read through it all, feel free to post any questions you might have about the process, as I'd be more than willing to answer any you may have.

Why do AML/KYC?

We are often asked both by email and on the forum why Mt.Gox does these checks. To give a very basic explanation of this issue, Mt.Gox handles both Bitcoin and fiat currency (Dollars, Euros, etc.) As a result, we are bound by the laws of Japan and America, along with various international regulations which cover the fiat side of our business. Very similar to how a bank in most countries must be regulated to ensure they are not facilitating money laundering, terrorist financing or the like, we are obliged to follow the same rules.

Whilst we could simply ignore our legal obligations, as a number of smaller, successful exchanges have done in the past, we have found that this invariably causes problems for both us and our customers. By not performing adequate AML/KYC checks, the banks that we must operate through can and have shut down bank accounts, trapping customer funds and causing us a lot of headache. Therefore, we try to follow this process as best as we are able with as little impact to our users as possible.

What does the process involve?

First, we ask you to provide one piece of government issued photographic identification, which is usually either:

• A driver's license,
• A passport, or;
• A military identification card (surprisingly, we have a large number of customers in the armed forces of various countries.)

We then ask you provide some form of proof of residence document, which is an official document issued within the last three months bearing both your name and full street address. For obvious reasons, we cannot accept addresses with PO Boxes. Usually, we receive one of the following:

• A utility bill,
• An internet bill,
• A cell phone or mobile phone bill,
• A tax return,
• A residency certificate issued by your local government,
• A voting registration form, or;
• A medical insurance bill

Whilst many of our users submit bank statements as their proof of residence, we unfortunately cannot accept bank statements from our customers. This is because it is relatively easy for fraudsters to open an account at a less reputable banking service which does not check the accuracy of a person's stated address. It is then possible to use this bank's statement as a seed to open accounts at increasingly trustworthy establishments without ever having provided proof of residence in the first place.

What does your division do?

The main job of the Compliance Division is to check documents we receive from our customers, and make sure that all of the necessary documents have been submitted, and more importantly, that none of the submitted documents are forgeries. We check submitted documents against our database of received documents, against publicly available sources of information and also put them through advanced image analysis to identify forgeries. This is done to protect both Mt.Gox and our users from fraudulent activity.

What happens if my application is rejected?

If we reject your documents, we will always explain by email what went wrong in the verification process. The top 5 most common causes for rejection are:

• Not submitting all the documents. Many people only give us a driver's license or passport on their first attempt, without providing any proof of residence. This is the most common reason for rejection, and costs our customers the greatest amount of time in having their accounts verified.
• Submitting documents which are too dark or low-resolution to read. The second most common cause for rejection, illegible documents cannot be accepted. Usually this is the result of trying to take photos of documents using a webcam or camera phone, where poor low-light performance and grainy / low resolution images are the norm.
• Providing files in the wrong format. We have a specialised interface for reviewing documents and putting them through image analysis. At the moment, it can only handle files which are either JPEGs, PNGs or PDFs.
• Submitting a proof of residence document which has a different name on it to the photographic identification. This often happens when a user is still living with their parents, or if a spouse or room mate pays the utility bills. In these cases, a signed, notarised statement that you reside with whoever's name is on the proof of residence will be enough for us to verify you.
• Submitting documents in non-latin script. Unfortunately, the Compliance Division doesn't have any staff who can read Cyrillic, Korean, Arabic or Hebrew. As a result, when we receive documents in these languages we must ask our customers to provide English translations of them.

Please note that even if you are rejected the first time around, there is nothing wrong with this - we will keep working with you until we are able to get you verified.

Myths and rumours

I'd like to address some myths and rumours that have sprung up surrounding our AML/KYC process, just to allay any fears people might have about our mysterious need to harvest everyone's identity.

Mt.Gox sells personal information to the DEA

If we were going to sell your personal information to a law enforcement agency, it probably wouldn't be to the American Drug Enforcement Administration. We would make much more money selling it to our local Tokyo Metropolitan Police, since we wouldn't be losing any money on the currency conversion. This rumour probably sprung up because of an interview our CEO (MagicalTux for those on the forums) gave some time ago, where he mentioned sending a letter to the DEA explaining what Bitcoin was. This was back when a certain American Senator was investigating Bitcoin over the growing popularity of Silk Road.

We invite our users to read our privacy policy and repeated posts on the forums where we state that we will only provide your personal documents when legally required to do so. This will usually involve law enforcement agencies issuing us a court order compelling us to release an individual's information and is a very rare event even in the fiat banking world.

Mt.Gox makes money from personal identification some other way, like selling it to advertisers

While it would be a great income stream for us, sadly we are not legally allowed to sell your personal information. This is both because of our privacy policy, and because we are based in Japan, a country with some of the strictest privacy laws in the world. In fact, hiring staff to fill our Compliance Division, hosting and securing an extremely large amount of image data and carrying out the AML/KYC process is one of our more significant company expenses.

So while we'd love to be able to offset the costs a little, if we were ever caught doing this as a company, we would face serious fines and even jail time. We hope that knowing that this threat to us exists gives you confidence that we're being kept honest.

Mt.Gox has stricter AML/KYC requirements than other companies

This is actually true, in some cases. For example, before Dwolla changed their terms of service they allowed some users to become verified with only a driver's license, or only a proof of residence document. While we truly regret that we must ask for as much documentation as we do at Mt.Gox, we are providing services to users internationally in Europe, America, Russia, South-East Asia and elsewhere, and as such have to meet the harshest requirements of all of the countries we operate in.

Many of our German and Polish users have probably experienced a great deal of frustration getting verified with Mt.Gox, as Germany and Poland both issue an identity card which includes a person's current address. Unfortunately, because we must also follow American and Japanese rules, we also have to ask for separate proof of residence documents.

Conclusion

I hope you found my post interesting, or at least informative. If you have any questions about our process, please feel free to either PM me or post here and I'll be sure to answer! If you have a question about your specific application to become verified, please email our AML email address so we can maintain the confidentiality of your application.

Yeah... no, that's not how it works...

I know, but honestly this will have the biggest impact on new Mt.Gox users who are far more likely to come here than the Trading Discussion sub-forum. I hope the mods will show a little leniency on this one, but if not that's quite understandable.

Oh please enough with the state propaganda bullshit.

Why don't you tell it like it really is. You are not obliged, you are forced under threat of violence to gather information about your customers so that governments around the world can control what your customer's money is being used for. "Money laundering, terrorist financing or the like" are victimless crimes the state invented as a way to gain even more control over the people they assert their rule over.

You can't imagine the angry thoughts that go through my mind when I read bs propaganda like this, I'm pretty sure if they already tried to attack people for thought crime I'd get the capital punishment.  >:(

http://bitcoin-otc.com/  ftw

You can't imagine the angry thoughts that go through my mind when I read this bullshit libertarian and anarchistic off-topic propaganda.
just because you a little afraid kid, paranoid about the big bad government, that is actually trying to make you safe and comfortable, you don't have to spray your fuck system shit around this forum at all time.

+1

Some people on this forum are truly paranoid about anything government related...

By robbing me of 40-50% of what I earn and by threatening me with violence and even death if I don't follow it's arbitrary rules to the letter? Yeah fuck that type of a protection, I didn't ask for it and I would never be stupid enough to ever do so.

Do a US issued driver licenses with printed addresses qualify as proof of residence?

I agree, can we leave the libertard propaganda out of a factual discussion like this? Go to Politics & Society and rant there. I don’t need to read the "TAXATION IS THEFT! INFLATION IS THEFT! AT GUNPOINT!" in such a thread.

Your kind is the worst possible publicity for Bitcoin.

Those of you saying I should STFU, I have a question:

If my comments aren't the truth, why are you so pissed about them, can't you just ignore me? Or does it hurt too much to be faced with the facts of reality for you to be able to do so?

I know, I know, cognitive dissonance is a bitch.  ::)

i like to live in my truth-free but happy little world.

(congratulation you just won a click on the ignore button)

Yeah, ignorance is bliss.

damn, now i have to go dig for an answer in another thread :-/

+1 for the explaination of your processes.
To bad Bitcoinica can not do the same  :'(

Ok, so far the not-so-much news about what you state why and what for you need all that info on users.

Now I am much more interested what flags the KYC on users, which freezes their account and funds until they comply? I refuse to comply to your KYC policy. What is the max amount of combined funds I may have? What kind of "suspicious transfers" (?!?) will flag me?

Being able to calculate the risk on MtGox would be a plus, and may keep me from going to another exchange like Intersango.

Ente

Depositing bitcoins is suspicious  :D

Thanks, tt. Your post brought to my attention that the OP stemmed from another section, so I went there first. But now I'm in a dilemma--where to post. It seems both have identical OP's, and both are currently getting commented on. The author, Dylan (https://bitcointalk.org/index.php?action=profile;u=46954;sa=showPosts) (what the hell did I just find while getting the URL of his user name?) (https://bitcointalk.org/index.php?topic=15911.msg633707#msg633707), did a fine job penning said post, using American English, but didn't have the foresight to realize that posting in two different sections at the same time, with exact OP, would only cause confusion unless, of course, that's the intent.

I guess I'm capable of only posting on this thread, my questions and concerns, importing quoted posts from the other thread. FUCK ME!!! After typing that, I realized that that may not work either, for it would continue to fork the timeline, creating a bigger mess everyone would have to walk through. Then again, maybe I'm just over thinking this.

That said, my first question, with many more to come. How strict does Mt. Gox abide by the following?


<tinfoil hat on>I just realized that when you posted this, it was about 3PM in Japan, with your last log-in at 7PM (Japan time), and now the weekend is coming up. Are you planning on working over the weekend, thus getting paid overtime (not sure how that works over there), addressing questions and concerns (now on two fronts) of which you've stated in the OP(s) that you would do? But that's not why my TFH is on. I simply find it odd that these threads where created immediately after I posted here (https://bitcointalk.org/index.php?topic=84042.msg948393#msg948393) (see timestamp).<TFH off>

When answering my question, you might as well make your answer as thorough as possible, for any vague answer will surely be followed up with more questions relating to this now very important age issue thingy.

~Bruno~

EDIT: I just realized something else. Dylan started both thread prior to begin addressing any questions or concerns. I believe that this was planned beforehand, knowing that the weekend was coming up, coupled with having these up to possibly take focus away from some other issue(s).

First and foremost, don't let the bullies in this thread silence you (and shame on them).  Your opinion is just as important as mtgox trying to work within the current system.

I think we have to view the situation for what it is…mtgox is trying to operate out in the open and within the confines of the existing law…whether that law is legitimate or not.  At BitPay, we do the same.  Above a certain threshold and we require identifying information before we'll process transactions.  We even turn away many merchants trying to sell things of questionable legality (they really shouldn't even be considering use of a third party processor like us in the first place).  Some of these merchants are already accepting payment from paypal or visa/mc.  As a libertarian, I don't agree with the prohibition and criminalization of drugs, yet we have to turn away those businesses.  As a Bitcoin business, you really have to make a decision, either you operate in the open and comply with the existing laws, or you completely mask yourself (as Silk Road has done).  There's really no middle ground.  Any business trying to operate in a middle ground is going to fail.

The reality is that money is information and, like any other form of information, it can be sent anywhere in the world in the blink of an eye and in complete privacy.  Many of the laws governing money simply ignore this basic reality and that's a dangerous situation that we must work to change.  People have to come to terms with the idea that financial transactions need to be allowed to be private if we value freedom at all.

Law enforcement has become accustomed to using the financial system to catch criminals, but this is only a relatively recent phenomenon.  It wasn't that long ago that the world didn't have computers or the Internet and the world still turned and law enforcement still managed to do their job.  We need to acknowledge that innovations around money are likely to take this tool away (Bitcoin or no Bitcoin) from law enforcement.  While I don't agree with all laws, I do agree with the concept of laws.  While I may not believe we need a government that consumes (and largely wastes) 25% or more of our economy, I do believe that even in a completely anarchistic society, we need a legal structure and we need law enforcement.

So, back to mtgox and Bitcoin businesses operating in the open in general…voices like yours are very important and highly valued.  You express an opinion that even people running businesses that try to remain in compliance with laws largely agree with.  These businesses need your voice and voices like yours in order to have a dialog with regulators that moves things in the right direction.  The thing I fear most is that Bitcoin and software like bitcoin will be banned.  I don't fear the collapse of Bitcoin, Bitcoin was designed to be unstoppable.  I fear it because I fear what such a course of action means for the fabric of society.  I fear what would happen when governments collapse.  I know some people believe that's inevitable and that we simply have to brace ourselves and manage the best we can.  I don't think it necessarily has to go that way, but we do need people that can listen and can understand.  

It's not even so much about ideology as it is about acknowledging reality.  Unfortunately for mtgox, BitPay and others, we may find that the market ultimately just routes around us.  The regulators might like the fact that mtgox is collecting all this information, but that's not going to do regulators any good when their volume is 0.

Well shit, so now I have to post this in two places because I don't know which thread is being monitored:

Thanks for the post MTGox_Dylan.  I think most everyone was already aware of these FAQ points, though.  That has never really been the issue, so I'm not sure what is hoped to have been accomplished by making this post, other than as a distracting measure (This would have been perhaps more effective: http://chanarchive.org/content/1_b/378881354/1328366326840.jpg).

The real problem here is, as has already been at least partially mentioned:

1. The lack of transparency in the process.
2. The lack of communication.
3. The lies and false promises made by MTGox Support Staff with regards to AML/KYC.
4. Delay after delay, ostensibly under the guise of AML.
5. The just plain ludicrous decisions (Goat as an example).  Perhaps transparency would clear these up.
6. The fact that most decisions made by MTGox seem completely arbitrary, and nothing... NOTHING pisses off customers more than arbitrary decision making.  When your actions are not predictable in a given situation, you are wrong.  Period.

So while this post is nice and all, I'm not sure what you're hoping to accomplish other than to distract from the real issues surrounding MTGox.  My situation, that has been on going since April, is still unresolved.  I am not the only one in this situation and there are plenty of others in similar situations. 

Again, this does not seem to be an AML issue, it seems to be an insolvency issue.  MTGox is unable to fund even moderate sized fiat conversions, which leads many of us to believe you guys are basically bankrupt and a disaster waiting to happen.  The fact that no one has publicly denied this (not that we'd believe you at this point anyway, given MTGox track record of lies and falsehoods) certainly does not bolster confidence in MTGox at all.

Maybe this is the wrong thread to bring any of this up, but I don't want people to be distracted by this kind of thread from the real issue of MTGox being unable to meet their obligations to even moderate sized customers, especially when you are trying to gain new customers who will end up completely screwed when the Gox house of cards comes crashing down.

So you need proof of residence because of bank standards but such proof provided by a bank is not accepted. Fuck this shit.

That's why I'm not angry you and mtgox are for the purpose of self preservation giving in to these threats of violence and following the state's rules. What makes me angry is not calling a spade a spade. Don't say you are obliged to comply, say you are forced under threat of violence, don't say money laundering, say state's arbitrary rules about money transactions, don't say terrorists, say organizations the state wants to destroy, ect. just cut out the bullshit state apologist propaganda and tell it like it is.

Personally I'm not against private law, I'm not against private rules, I'm just against rulers. In fact I support some voluntary, private and most of all consistent rules that would be mandatory for everyone wishing to be part of a society(not geographically bound of course) to follow.



The only point of my entire rant was that if you really share my ideals and want to get from under the thumb of state sponsored violence, stop spreading their bullshit PR propaganda. It's as simple as that.

I only have one question.

How the fuck can zhou tong use mt gox via bitcoinica when its explicitly stated in your tos that its impossible because he is 17 if Im not mistaken ?????

Maybe some people are more equal than others.....

ToS didn't exist back then...
And before the ToS was added to the site, his account got moved to a corporation so it wouldn't matter.

So let me get this right. Nothing in either of these two threads is going to be addressed till Monday. Come Monday morning, Dylan is going to go to his desk with his fresh cup and coffee and start addressing each and every question and concern on these two threads. Why? Because it's his job and he said he would. My guess is that he'll still be sitting there come Tuesday and his coffee will be cold unless, of course, Mark is looking over his shoulders and bringing fresh cups of coffee while they ponder how to address the more difficult questions and concerns, ones that can't be easily replied to with, "I'm not at liberty to answer that question." or, "I'm going to have to ask so-and-so."

~Bruno~

He was 16 y/o at the time. And if being incorporated excuses the legal age requirement of one using an exchange, then I guess my 10 y/o nephew has something to look forward to. I'll simply make sure he fills out the online application from Delaware correctly.

~Bruno~

Is there a difference betwen AML/KYC policy and 'suspicious' activity policy with mtgox?
For instance, I use a VPN much of the time, but I have to remember to disconnect in case I accidentally log onto mtgox and create a 'suspicious activity' alert.
The level of trade I have on mt.gox means that I haven't entered into the the level of AML - would proof of id related to suspicious activity be kept for AML purposes, or would it just be for your own security concerns?
Ideally if I accidentally logged on with a VPN I would be happy to provide proof of my id for your eyes only, but I would be less happy for you to keep it permanantly.
I'm happy to comply with AML/KYC should it become necessary if my trading level increases, but the level of my trading should allow me to be free from that even if I accidentally create a suspicious activity alert.

wtf do they allow 16yr olds to become corporations ?????

They sure do and did. I'm ready to start the process to show how easy it'll be for a 10 kid to get an approved account at Mt. Gox. Meanwhile, look what I found.


~Bruno~

Lol

I believe that you're angry but I'm skeptical that you're actually angry at Mt. Gox.

Is their refusal to antagonize the regulators who barely even need an excuse to shut them down really the most egregious example of not calling a spade a spade that affects you on a daily basis? Could the actual source of your anger someone or something a little closer to home?

Can you please explain what the Japanese rules are, because this is clearly inconsistent with US rules.

The US customer identification requirements are not to acquire copies of specific documents, but rather to verify the information that you're given.

For example, is the address and phone number valid?  Did the customer receive mail that you sent to that address?  Is the information consistent, ie does the telephone area code match the address given?  If the customer claims to have lived at the address for 3 years, can you verify that with a third party (eg a telephone directory)?

Photocopies of ID cards are generally not sufficient or required, because someone could submit a copy of someone else's ID.  If a customer walks into a bank in the US and opens an account, a bank employee will look at the photo ID to make sure the customer is not using someone else's ID, but they don't need to photocopy it.

In the event that you are not able to verify a customer's information, you do have to return their money.  You don't have to do business with someone, but you can't just take their money and keep it.

<off-topic>

Being obliged == being forced to, AFAICT.


Chill down man, you'll only get an ulcer for nothing.
I usually get angry with authoritarianisms I see happening day by day, but you're letting yourself go too easily if just this OP was enough to get you angry. It won't do you any good.

Plus, the correct wording may make a lot of difference in the results, even if in the end it's the same thing you're saying. It's probably wiser for OP to use the words he used instead the words you'd used. That will probably make his job and the business of his employer last longer. Plus, he didn't need to lie.
Btw, remember they are using their own identity here. When my parents were teenagers, publicly speaking about the state the way you've just done here would probably get them in jail, or worse, make them "disappear". And even recently, a political blogger in Brazil just got shot 6 times, miraculously survived, and now is facing a lawsuit from a federal representative bitch for "moral damages", while the investigation about his attempt of murder is practically archived already.
TL;DR: Don't look for troubles. Take care.

</off-topic>

People are in fantasy-land thinking that "this" was not the eventual outcome.  People need to be realistic and think about the risk 3rd parties take, when they convert you cash in a credit so you can use there service.  If you think you can do better, design a system and operate it and see what happens.   I would be concerned more if a service like Dwolla or Mt. Gox didn't ask for this. 

No, all of these refer to laws passed at different times modifying similar sections of the United States Code. They all refer to the same laws, or to activities the laws require.


All levels of trade are subject to AML/KYC/BSA/Patriot Act.



Enhanced Due Diligence (KYC - know your customer) provisions require that they obtain valid ID for everyone.

Thanks for being open, Gox. Those who feel uncomfortable with the rules, regulations, and taxation of fiat currency are welcome to stop bitching and start living without fiat. Hey, Bitcoin is here. Use it. Nobody is forcing you to go to Mt.Gox and surrender your government-issued ID back into the hands of... government. Or something like that.

Mt Gox needs to use a third party for AML/KYC rather than do it themselves. There is too much incentive for them to simply claim documents are fake and block account holders because there is no transparency at all .

Its like putting the banks in charge of their own regulations through the SEC which caused the GFC !

Im more worried about my personal ID being on a site thats a honeypot for hackers....considering mt gox has been hacked in the past its not a risk I want to take. Did someone mention identity theft ?

im my opinion, because they have been hacked, you have a reason to trust them: they have failed and learned, and they are therefor more secure now then before.

MtGox doesn't need to do anything because it's regulated by it's customers (i.e. the free market). Just watch how fast they'll fall if they are stupid enough to start operating in bad faith.

exactly :(

Agreed -- thanks for being open, and explaining these rules in a public forum.

Just imagine HSBC or Bank of America being willing to do the same, and you'll see how different the bitcoin community really is.

They already are operating in bad faith.  They are not informing their customers that they do not have the fiat funds to cover withdrawals over a few thousand dollars.  There are a number of us at the moment with $10,000+ withdrawals being held indefinitely without any explanation, but if we make smaller withdrawals those go through. In my case, I've had zero problems with withdrawals in the past and I have been a verified member for quite some time.  Haven't changed any account information, etc...

If that's the case I have no doubt in my mind that their clientele will shrink accordingly.

It already is. Why did you think they were so aggressively launching new features, issuing press releases, and posting about transparency on the forums?

https://i.imgur.com/xFKjz.png
^{Source: http://bitcoinmagazine.net/growing-decentralization-in-the-bitcoin-economy/}

Bingo. Don't you just love a market regulated strictly by market consumers i.e. the free market? :D

a bit off topic but regarding mtgox & it's support

I had a withdrawal to okpay, which is not processed. status shows error:
2012/06/04 21:36:42   Withdraw   Status: error   $262.35000   $0.00239
Withdraw to account okpay

Money not refunded to my mtgox account, neither sent to okpay.

Before and even AFTER this withdrawal I have successfully completed withdrawals to okpay.

I'm unable to contact mtgox, tried to send a support ticket, but browser shown a red frame without an error message.

Please let me know who can help.

login: nandika

actually this is a great suggestion. 

mtgox could make up for the increased scrutiny by educating us customers about all the subtle monetary transactions or moves that might trigger an audit by the authorities. 

this could go a long way to proving that gox is really on our side, not the gubmints.

Your idea is for Mt.Gox to structure customer's payments so that it does not attract the attention of the authorities. Great idea. I see why you do not run Mt.Gox.

I think its already happening.You can easily avoid mt gox altogether because other market participants are stepping up and offering what mt gox cant. For instance Tangible Cryptography has a new service of buying your coins for paypal,dwolla and other methods.

not at all.  educate customers so they can structure their own tx's so as not to attract attention.

my own local bank has helped me in this matter.

quoting this

In some jurisdictions that is highly illegal.

A great deal of this information is publicly available on the websites of FinCEN and other AML/CTF regulators.  Because it's such a complex area, there are even flow charts, Power Point presentations, and newsletters highlighting current trends.  There are also a great many summaries of cases which have been prosecuted using FinCEN data.

You don't have to qualify that statement by saying "some" jurisdictions.

Since I don't know the laws of every country in the world I refrained from making a statement that claimed more knowledge than I possess. It's highly illegal in at least one jurisdiction.

As usual its the little guy that suffers, meanwhile the rampant criminality shown by wall st bankers continues to go unpunished.....

You can't be seriously suggesting that merely learning about the state's arbitrary rules about money transactions is itself against their rules, can you?

Then they couldnt entrap people and confiscate their money  :)

Yeah, I can see how that would work:

"Follow the rules!"
"What rules?"
"Sorry, as per rules, I'm not allowed to teach you."
"Oh, ok, fuck you."

I think they make the rules up as they go ?

according to this logic the State should just take down all Speed Limit signs on freeways and ticket all vehicles over the "allowed" MPH.

That's not what your asking for.

You are asking for advice on how to evade the law when you are knowingly doing something illegal. Which, knowing what I know about governments, is illegal in every jurisdiction.

If you are not doing anything illegal then why do you care if a SAR gets filed?

In fact, if you are a "libertarian" you should be rejoicing that the government's databases are being filled with useless information.

you're assuming the worst.

i am, in fact, doing nothing illegal.  i, as a fully legal user of Bitcoin, am very interested in not attracting attention if i don't have to.  there's nothing wrong with wanting to fly under the radar.

do you, as a fully compliant taxpayer i assume, not mind undergoing an IRS audit if its not necessary?

If you're not breaking the law, then why are you asking for advice on how to break the law? (http://en.wikipedia.org/wiki/Structuring) Which alone could put you in prison for 5 years.

Because you are a Bitcoin user I'm going to assume that the amounts of currency you deal in would never have any chance of triggering a CTR or SAR, ever, by itself. Why would you admit to successfully seeking advice from your bank on how to structure? Which, by the way, was likely only your bank humoring you and immediately writing up a SAR after you left.

on the contrary.  i'm asking how to stay within the parameters of the law. 


stop making so many assumptions.  its very reasonable for anyone to want to know how to avoid unnecessary attention.

Oh oh oh... lord have mercy, do not go there, Galambo.  The defense of "If you don't have anything to hide, then why do you care if we invade your privacy?" will fall on deaf ears around here.  Not only is it complete crap as a defense, it's just plain wrong morally.

Lets take my example - I would like to avoid it - not because of anything illegal, I would just like to get my money in a timely fashion.  They can scrutinize my transactions all they want; they are perfectly legal.  However, I am out $26,000 (now $10,000) for more than a month for essentially nothing.  I've followed the protocols, sent in the required documents, etc... yet I can't access my money because I sent the wrong value amount for a transaction.  If I had sent a lesser amount or a different amount, then I'd already have my money.  Nothing illegal going on anywhere.

Yeah... the "If you've got nothing to hide" defense is not going to fly.

It's not exactly like that because there's nothing inherently illegal about pointing you to public information regarding the rules.  The FinCEN website is full of information about the rules, cases where people have been prosecuted a a result of data received by FinCEN and cases where FSPs have been fined for failing to comply with and enforce AML requirements (the last is especially interesting because it helps clarify FinCEN's actual expectations as opposed to vague, broad principles).

Similarly, AUSTRAC's website is also full of information about the various types of reports which need to be filed with them and under what circumstances.  There's nothing "secret" about the rules - there are entire sections of the website devoted to explaining them (this is necessary because the Act itself and the Rules Instrument are quite confusing).

If it seems like services often go above and beyond what is required by the relevant AML/CTF/KYC requirements, it's because the cases where service providers have been fined and/or prosecuted demonstrate that the regulating bodies expect a much higher level of customer identification and transaction monitoring than their "all about your obligations" type material for reporting entities first implies.

Here's a list of cases where service providers have been fined for not adequately complying with AML/CTF/KYC requirements.

http://www.fincen.gov/news_room/ea/

Notice that even though Western Union was compliant in reporting "bright line" suspicious activity, it was still fined for having inadequate systems in place to detect and report structuring.  Notice also that these fines have been applied as consent orders.  That basically means that the services are accepting the government's interpretation of their obligations as being legally correct.  The day will probably come when someone challenges such interpretations and the actual legal obligations of services are clarified by a court.  Until that happens, though, services will continue to be cautious because the consequences of getting the whole "risk-based assessment" thing wrong are so huge.

Here's a list of cases where FinCEN data has played a role in the prosecution of people for various financial crimes.  You'll notice that not all of these involve what people traditionally think of as "money laundering".  That's because many FATF member countries now regard using money from "any serious crime" as money laundering rather than specifying certain types of crimes as predicate offences.

http://www.fincen.gov/news_room/rp/sar_case_example_list.html?catid=00005

And here's a basic flow chart regarding ongoing customer due diligence requirements in Australia.

http://www.austrac.gov.au/img/ocdd_large.jpg

Here's a basic primer on reporting obligations and what triggers them in Australia.

http://www.austrac.gov.au/rg_9.html#ifti

http://www.austrac.gov.au/rg_9.html#faq

Hi All,

I apologise for the delayed response. I'll now answer what questions I can:

@Serge - A driver's license with printed address is fine as long as it was issued within the last 3 months. If not, we need an alternate form of proof of residence.

@Ente - Unfortunately, I cannot discuss the specific mechanisms which trigger an account flagging in detail for obvious reasons - making this information generally available would allow those who do want to perform illegal activities to find loopholes and fly just below the radar. I'm very sorry I can't give a better answer than this.

@Bruno - I'm unfortunately not that clever. In hindsight, it would have been far better to create this information thread on a Monday when I could respond to everyone in a timely manner. I'd also like to clarify that I'm very far removed from our PR department, and only created this thread to help explain to users how our AML process works, dispel some common misconceptions, and hopefully make my job easier by reducing the number of incorrectly submitted account verification requests.

Now, to answer your question specifically:

We do not allow users under 18 to use our service as per our ToS. With regards to Zhou Tong, I've discussed it with Zhou and he's very kindly allowed us to share his personal circumstances - in his case, we received written consent and documents from his parents so that he could continue to keep an account with us, as he did indeed create an account before we had our ToS.

@dancupid - Essentially, all personal information collected by us enters into the same "pool" of data, which is a secure data store where files are kept for 5 years as legally required. We can't delete records from here, unfortunately.

@Bitco - The Japanese requirements are fairly obtuse as they've been written specifically with Japanese citizens in mind. They basically boil down to:

• A valid photographic identification document must be collected and,
• A letter must be sent by registered mail to the user's address as proof of residence.

We are currently working on putting in place a system that will let users receive registered mail to prove their residential address, but for now we are collecting alternate forms of proof of residence documents. We are very sorry for the inconvenience. With regards to returning funds, we absolutely do return funds as soon as any AML investigation is completed, unless legally required to pass the funds onto law enforcement pending additional investigation. There is no situation in which Mt.Gox will keep customer funds for itself as part of an AML investigation.

@CryptoCoinMedia - We are currently looking at outsourcing and partially automating our AML operations, although this has more to do with efficiency than transparency. We'd be very happy to hear any opinions our users might have on this point, actually. Would you prefer to provide personal information to Mt.Gox directly, or a trusted third party?

I would finally like to thank repentance for the excellent information he has also been providing throughout both threads, which is always accurate and useful.

If anyone has any additional questions, please feel free to ask.

In regards to a letter being sent by registered mail, the certificate provider StartSSL does that too. I have renewed my Class 2 validation with them a few times, and since I have no phone bill (employer pays it), I have had to get a registered letter sent from Israel every 2 years. It works great, and I think it's a good way to do it.

Be nice to have the same transparency for BFL customers right?

Government kills!

Non-governmental terrorism, organized crime, and nut job mass shooters combined have a couple of hundred million in body count to go to match government as the number one cause of bulk megadeath.

The US government also conducted radiation experiments on its citizens without their knowledge or consent from the 50s throughout the early 70s according to the San Jose Mercury and LA Times.