Bitstamp response to verification of documents - difficult to understand...

[tagbond]

So..I was setting up an account with Bitstamp, since I trade on other exchanges and figured why not try them out... for a utility bill, I supplied a PDF file for Council Rates from the Australian government and I get this back from Bitstamp...

----------------
We regret to inform you that your verification request has been denied.
Reason:
Electronic version of utility bill does not meet out verification standard, please submit another utility bill (photograph or scan of physical paper bill).
----------------

Considering that most bills from Australia, certainly all of mine, come in PDF format, including bank statements, rates etc, so I can save a few trees and make life..well..just easier. Are they seriously expecting me to call one of my utility providers and ask them to send me a paper bill, so i can scan and send it to them? Are they living in this century?.. Even my compliance guy does not understand that kind of thinking...

anyone tell me why, from a compliance point of view, why this would not pass?

[hazek]

Whilst Bitstamp is currently unregulated and does not fall within the scope of the AML/CTF obligations in the UK, the senior management has implemented systems and procedures that meet the UK AML legislation (please find the details here: https://www.bitstamp.net/aml-policy/). Bitstamp`s verification procedure is following these standards.

Please note that if you do not have any documents currently that meet our standards, you can also request a proof of residency from your local government or print an electronic utility bill and send us by a notary verified copy.

[tagbond]

Thanks for the response, obviously you work for Bitstamp.

We also plan on following a similar policy on AML / KYC and we WILL be regulated, but please point out to me on your linked page where it is not acceptable for a government issued bill in pdf format. Over time, this will become the de facto method of sending bills out to customers,so this policy of non acceptance shows no real world idea of how utility bills are being sent out. If that is itself a government policy, well, I would have thought more of the UK government thinking ahead...

The fact remains that it is very difficult to find an actual printed letter that arrives snail mail..:-), and forcing a user to go through hoops just means they will go to an exchange that still complies with AML/KYC but can go also on other facts (like doing a quick check of the identity of that person through other means ie: googling for someone).

Just my 2 satoshis..

[postcd]

it is more easy to fake electronix document than classic scanned paper document. I susually let my bank to send me statement by post when i need up to date document. i pay money, but what you can do..

[tagbond]

It's just as easy to modify a scanned document as it is an electronically issued one. Photoshop handles the files the same way.

[tagbond]

If you check the AML regulations for the UK, you will find this statement:

6.27 - Evidence of identity can be documentary or electronic and appropriate records should be kept. There is no requirement for businesses to keep a copy of the evidence seen. It is sufficient to record details of the evidence seen but those records should be robust enough to trace the original document at a later date. One example is recording a passport number and issuing authority.

So basically I have not found anywhere where in UK guidance that states documentary evidence cannot be electronic, as long as the documentary source is what is needed - in this case a government issued rates bill.

I understand if Bitstamp has those rules, but they are not the UK regulations.

[enquirer]

just print your bill on paper, then scan it

[hazek]

..but please point out to me on your linked page where it is not acceptable for a government issued bill in pdf format..

From Joint Money Laundering Steering Group (JMLSG), -> Guidence Part 1 -> 5.3.74 (page 62 - 63)

[hazek]

just print your bill on paper, then scan it

This is acceptable only if it's a copy which was authenticated as valid by a notary.

[tagbond]

This is daft..how do you know a document has been sent electronically and then scanned or has been sent by snail mail and scanned - too funny..:-)

As my elderly mother has pointed out, even she gets her bills in electronic format these days - hilarious that you will accept a snail mail bill with that has not been notarized, but you state that the same thing in electronic format needs a notary - Are you aware of how that sounds?..

[tagbond]

Thanks for the link - I was looking at an older version for 2007, and the link you sent was for 2011. It just goes to prove that the UK is just not up to date. Sounds like that part was written by someone who doesn't really understand how the internet works.

[Jumpy]

If you haven't been regulated yet, why can't you let users who can't verify make one-time withdrawals. I'm sure you've observed that such individuals feel that you are stealing their funds. Have you been threatened with many lawsuits for this yet?

[tagbond]

On Bitstamp, as will be the case in our exchange, you have to get verified before you can even deposit fiat funds to your account. However I think you are talking about depositing Bitcoin to your account, selling it for USD and then trying to withdraw it. In this case, I think a notice should be shown to the user before that trade is done, that states if you do that you have to be verified to withdraw it. It won't stop you trading it, but at least the trader knows the rules. The exchanges have to comply with AML / KYC regulations otherwise banks won't deal with them. Even for one withdrawal, the banks need to know where the money is coming from and where it goes when you pay out.

[Jumpy]

In my case, I had funds on the account and then they implemented the KYC, without letting me withdraw my funds. It had not been announced in advance of my trading on the exchange; incredibly unprofessional.

[hazek]

If you haven't been regulated yet, why can't you let users who can't verify make one-time withdrawals. I'm sure you've observed that such individuals feel that you are stealing their funds. Have you been threatened with many lawsuits for this yet?

We always do our best to resolve any issues with customer verification. If you are someone like that, please contact our support and you will be given instructions on how to resolve the matter.

[tvbcof]

In my case, I had funds on the account and then they implemented the KYC, without letting me withdraw my funds. It had not been announced in advance of my trading on the exchange; incredibly unprofessional.

It would have been simple and fair to simply dis-allow deposits and activity until balances fell to zero or until suitable identity documents were produced.  This would have alerted even users who relied on the API that there was an issue to attend to.  Even e-mail warnings were not provided as I understand things.

To me, this was unprofessional at best and bumped right up against criminal extortion.  There are very good reasons for people to not wish to spread their identity documents around which have nothing to do with any criminal activity or such-like.  Holding people's funds hostage until they provide such documents is deeply wrong and as I read Hazek's comments they were under no obligation to do this by force of law or whatever.

I personally cannot see how anyone could trust this organization going forward due to this failure in ethics.  I suspect that BTC liquidity at Bitstamp is primarily from under-capitalized and thus desperate sellers, and that it will run out even faster than other pools of funding will run out at other organizations.

[tagbond]

So the correct procedure that should be followed is at the point when a user is going to add BTC or coins into an account, show a warning stating that if they sell for Fiat and want to take out the money later, then they have to provide government ID and utility bill to satisfy the banks that no money laundering is taking place. If they still wish to go ahead at least they have had fair warning and can decide then.

We are just creating the exchange this week, so we have to strike a balance of informing users and keeping our banking partners happy. We operate from the Philippines where the Central Bank knows us quite well, and the banks have no problems with us. I'm also fairly well known, and I have quite a bit of capital of my own that is backing it up. However, still need to make sure to balance customer needs and worries with banking requirements, so it's good to get feedback..

[malevolent]

Good luck, just don't be overzealous with the AML/KYC bureaucracy, and let people deposit and withdraw bitcoins without any issues.

Mt.Gox and Bitstamp are now requiring that people submit their docs even for BTC withdrawals.

MagicalTux said himself that they are asking for more than they are required by law. Don't be that guy

[Sukrim]

just print your bill on paper, then scan it

This is acceptable only if it's a copy which was authenticated as valid by a notary.

... if it is even possible for you to differ between a version that was printed at the company or a version that was sent as PDF from the company and printed out by me. They usually look completely the same in my case, though I for example chose to get 1-2 utility bills still via snail mail for exactly these AML/KYC reasons. Sometimes you get a weird web page with account overviews, but mostly I go the exact document that would have been printed + mailed, just as a PDF instead of a physical copy.

As hazek is watching, I don't dare to recommend to just print the damn thing on a good laser printer, fold it twice and scan it instead of complaining that PDFs aren't accepted... but I would recommend this, if he weren't here.

[tagbond]

Part of checking AML is KYC, and it would be so easy to check my email, web presence, websites, reputation. I would not always go on a simple document that could be forged in so many different ways. It is very easy these days to check if someone actually exists. My pictures online match my name, my email, websites and so much more - It only takes a few seconds, so I train my staff to look a bit further than just the documents, without inconveniencing the customer. Most regulations state that one should do due diligence.

So no I won't be going further than the regulations needed from our banks. There is no point. They just need to know from time to time where money is coming form and going to. We just need to be satisfied that the customer is real, has no obvious problems, and then as transactions are carried out, evaluate on a continual basis. There is more to this than just a document provided - one has to look at patterns as well.