Tradehill - identity requirements for Australian customers

[Wombat]

Tradehill sent me an email (full text below) requesting paperwork to confirm my identity (something that wasn't required when the account was originally created).

Is this a common requirement for BTC exchanges? I have no idea what an Australian AML policy is, but I can certainly believe that they were requested to do this by their Australian bank. I'm not unsympathetic to Tradehill's position here (although I'm dubious that it's an actual legal requirement for them to gather this info), but there's no way I'm sending any of this info that's ripe for identity theft (and certainly not in an unencrypted email as requested), and I've emailed them asking what will happen to my account/funds as a result.

Thoughts?

TradeHill Info info@tradehill.com to bcc: me

Dear customer,

IMPORTANT: We are using sendgrid in order to send this email to hundreds of users. Please do not send us any information to this email address as it will not be received by our team. For reference, we have also posted a blog post with summarized information here: www.TradeHillblog.com.

We have been working to improve our processes to comply with Australian regulations, which has resulted in a few changes that we need to communicate, so we have two updates for our Australian customers.

1-In order to comply with Australian AML policies and our new bank's fraud prevention policies, we will have to verify the identity of our customers. This will be a simple procedure and will be required only once for each account. We have taken every precaution to make this process as agile and painless as possible without interrupting our service.

To begin this process, we will need your full name, any service bill with your name on it (or another document to provide proof of address) and ONE of the following items:

a) Scanned copy of your driver license
b) Medicare number and reference
c) Scanned copy of your passport

Please send this information to info@TradeHill.com from the email address you used to sign up with us and DO NOT reply to this email with the information.

Also, the bank account(s) that you use for deposits and withdrawals, will have to match the name registered in the TradeHill account. In case you require to make a withdrawal to a third party (either to pay for a service or fee) please let us know in advance as we will also have to verify that account.

2-We have opened a new bank account for our customers and the old one at Commonwealth bank will be closed. Please see details below:

Account name: Business Zero Account
BSB: 302-100
Account No: 1794808
Account mailing address: 40 Daley Rd Acton, ACT, 2601
BIC (SWIFT): BKWAAU6P


Please note that the account verification is a requirement from our bank. Non compliance with this may result in our account falling at risk of being frozen or closed which would force us to interrupt service for our customers. Therefore, our goal is to verify all Australian TradeHill accounts by September 15th 2011.

As usual, if you have any queries or concerns, please send us an email to info@tradehill.com.


Best regards,
TradeHill Team

[SolidCoin]

Good luck with that tradehill.

Whats the point of a p2p currency if it becomes just another centralized bank system ?

[Oldminer]

Actually looks like it could be legit.

I found this: http://www.austrac.gov.au/

I wonder if MtGox might be next?

[Wombat]

Actually looks like it could be legit.

I wasn't doubting the legitimacy of the email, although they could have done more to make it not set off my immediate reaction of "phishing scam".

If this request is driven by the requirements of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, I will await with interest to see whether Tradehill is considered to be a reporting entity under that act.

[SolidCoin]

Welcome to bitcoin.com please bring your passport and drivers license.

We require dna samples and bodyscanners before you can trade.

[Andre Jensen (World Bitcoin Exchange)]

try https://www.worldbitcoinexchange.com for AUD

they are still currently flying 'under the radar' so to speak.

Take a look at our "help" section heading "Account Limits" to see how we operate in regards to this matter.

https://www.worldbitcoinexchange.com/?page=help

Trade Well - Andre

[MagicalTux]

We have noticed recently a surge in fraudulent deposits of funds in Australia, so this might be linked.

Some of those have passed through our anti-fraud system (a bit less than AU$1000 worth of funds which we have taken as loss), which we have been tuning to detect this kind of fraudulent activity. We are working with our provider in Australia (Technocash) on reducing the volume of fraudulent activity (as we can detect those in advance with better accuracy, it becomes not profitable enough for fraudsters and they find other ways to cash out their illegal money).

[Andre Jensen (World Bitcoin Exchange)]

We have noticed recently a surge in fraudulent deposits of funds in Australia, so this might be linked.

Some of those have passed through our anti-fraud system (a bit less than AU$1000 worth of funds which we have taken as loss), which we have been tuning to detect this kind of fraudulent activity. We are working with our provider in Australia (Technocash) on reducing the volume of fraudulent activity (as we can detect those in advance with better accuracy, it becomes not profitable enough for fraudsters and they find other ways to cash out their illegal money).

Totally agree. we are seeing the same activity.

[payb.tc]

We have noticed recently a surge in fraudulent deposits of funds in Australia, so this might be linked.

Some of those have passed through our anti-fraud system (a bit less than AU$1000 worth of funds which we have taken as loss), which we have been tuning to detect this kind of fraudulent activity. We are working with our provider in Australia (Technocash) on reducing the volume of fraudulent activity (as we can detect those in advance with better accuracy, it becomes not profitable enough for fraudsters and they find other ways to cash out their illegal money).

Totally agree. we are seeing the same activity.

what's a 'fraudulent deposit'? do they try to reverse the deposit after they get their bitcoins?

[Andre Jensen (World Bitcoin Exchange)]

We have noticed recently a surge in fraudulent deposits of funds in Australia, so this might be linked.

Some of those have passed through our anti-fraud system (a bit less than AU$1000 worth of funds which we have taken as loss), which we have been tuning to detect this kind of fraudulent activity. We are working with our provider in Australia (Technocash) on reducing the volume of fraudulent activity (as we can detect those in advance with better accuracy, it becomes not profitable enough for fraudsters and they find other ways to cash out their illegal money).

Totally agree. we are seeing the same activity.

what's a 'fraudulent deposit'? do they try to reverse the deposit after they get their bitcoins?

I can only speak for https://worldbitcoinexchange.com ,  new users make a deposit to our account.....In order to by past the anti-fraud system the deposit is a little under $1000 dollars, then a few days later a withdraw request comes trough for that same user the user hasn't traded on the exchange but used the exchange to store money, then withdraw at a later date.

As we don't charge a fee to our users to deposit or withdraw funds on our exchange this would be an incentive for fraudsters to frequently use this services and its then this could be determined as a 'fraudulent deposit'  the bank red flags the activity and the activity is passed on to AML. (i believe this is what Tadehill is facing currently..... then again i could be wrong you will have to wait for there reply to this matter.)

In light of this..... and its not the only reason for doing the following, we had to re-set our Withdraw and Deposit Limits to deter such activity.

Trade Well - Andre

[miernik]

I can only speak for https://worldbitcoinexchange.com ,  new users make a deposit to our account.....In order to by past the anti-fraud system the deposit is a little under $1000 dollars, then a few days later a withdraw request comes trough for that same user the user hasn't traded on the exchange but used the exchange to store money, then withdraw at a later date.

As we don't charge a fee to our users to deposit or withdraw funds on our exchange this would be an incentive for fraudsters to frequently use this services and its then this could be determined as a 'fraudulent deposit'  the bank red flags the activity and the activity is passed on to AML. (i believe this is what Tadehill is facing currently..... then again i could be wrong you will have to wait for there reply to this matter.)

In what way can such a deposit and withdrawal be in any way "fraudulent"? I don't see absolutely any benefit for the alleged fraudster from such an operation. He deposits 1000$, he withdraws 1000$ - he had 1000$, he has 1000$.

In no way this can help in any "money laundering", as he can much simpler just withdraw the 1000$ from an ATM in cash, and presto! - he has cash, untraceable and clean, he can deposit it anywhere, with no way of tracing the source. So funneling a 1000$ though the exchange bank accounts doesn't offer any more "laundering" possibility of a 1000$ then a banks ATM.

This would be different for a 1000000$ - as it might be difficult to dispose of cash in that amounts, so here exchange's bank accounts could offer some opportunity. But for a 1000$, or even 10000$ (still easy to dispose in cash)? No way.

So what is the problem?

[payb.tc]

I can only speak for https://worldbitcoinexchange.com ,  new users make a deposit to our account.....In order to by past the anti-fraud system the deposit is a little under $1000 dollars, then a few days later a withdraw request comes trough for that same user the user hasn't traded on the exchange but used the exchange to store money, then withdraw at a later date.

As we don't charge a fee to our users to deposit or withdraw funds on our exchange this would be an incentive for fraudsters to frequently use this services and its then this could be determined as a 'fraudulent deposit'  the bank red flags the activity and the activity is passed on to AML. (i believe this is what Tadehill is facing currently..... then again i could be wrong you will have to wait for there reply to this matter.)

In what way can such a deposit and withdrawal be in any way "fraudulent"? I don't see absolutely any benefit for the alleged fraudster from such an operation. He deposits 1000$, he withdraws 1000$ - he had 1000$, he has 1000$.

In no way this can help in any "money laundering", as he can much simpler just withdraw the 1000$ from an ATM in cash, and presto! - he has cash, untraceable and clean, he can deposit it anywhere, with no way of tracing the source. So funneling a 1000$ though the exchange bank accounts doesn't offer any more "laundering" possibility of a 1000$ then a banks ATM.

This would be different for a 1000000$ - as it might be difficult to dispose of cash in that amounts, so here exchange's bank accounts could offer some opportunity. But for a 1000$, or even 10000$ (still easy to dispose in cash)? No way.

So what is the problem?

let's say someone wanted to transfer $1000 in russian mafia money to a nice 'clean' bank account in new zealand... if they transfer directly then there's an association between the two bank accounts.

but if they deposit anonymously to an exchange, then withdraw to the nz bank account, they've helped launder the money (authorities would have to go one extra step of contact the exchange for more detail).

[miernik]

let's say someone wanted to transfer $1000 in russian mafia money to a nice 'clean' bank account in new zealand... if they transfer directly then there's an association between the two bank accounts.

but if they deposit anonymously to an exchange, then withdraw to the nz bank account, they've helped launder the money (authorities would have to go one extra step of contact the exchange for more detail).

So what's the problem? If some time ever later authorities want to investigate the transfer which came into some account in New Zealand, and they see it came from the account of the Exchange, they just ask the Exchange about it, and Exchange gives them the account data of where funds came to this account. Each bank transfer has data of the source account, so the Exchange just looks it up in the bank statement. Problem solved, authorities can go on asking the source Russian bank about it. No need to impose additional restrictions on traders.

For example banks in Poland are rather removing restrictions, rather then putting new ones. For example in some banks in Poland, you can now open an account there just over the internet without showing or sending a copy of your ID to the bank, just by making a bank transfer from a some other account you have a different bank. The single incoming bank transfer from a different bank is the only form of ID they ask for. They just assume that the other bank already seen your ID, so there is no need to ask for it again. The bank will receive your data with the incoming transfer from the other bank, and just use that as sufficient ID verification. This is something new, and two banks in Poland in the EU implemented such system this year.

So if data from an incoming transfer is sufficient ID to open an account at a bank, through which you can later transfer any amount of money without restrictions, it'd be surely enough for currency exchange. In fact web currency exchange operators in Poland do the same thing: I have accounts at several EUR/USD/GBP/PLN web based exchange systems, and none of them ever asked for an ID, just an incoming transfer from a bank account. They'll only ask for ID to make a transaction over 15000 EUR (that's 20000 AUD), and that is the value for a single transaction, not daily turnover or something! You can do many <15000 EUR transactions daily without being asked for an ID.
The banks which allow opening accounts just with verifying your ID with an incoming bank transfer don't even have this 15000 EUR restriction, I can transfer up to 250000 EUR daily with a few clicks on the web, for more I have to go to the bank branch.

[payb.tc]

let's say someone wanted to transfer $1000 in russian mafia money to a nice 'clean' bank account in new zealand... if they transfer directly then there's an association between the two bank accounts.

but if they deposit anonymously to an exchange, then withdraw to the nz bank account, they've helped launder the money (authorities would have to go one extra step of contact the exchange for more detail).

So what's the problem? If some time ever later authorities want to investigate the transfer which came into some account in New Zealand, and they see it came from the account of the Exchange, they just ask the Exchange about it

but maybe they'd be far less likely to even investigate in the first place, if the 'from' address was abc exchange in USA or wherever, rather than from some more random name in russia, nigeria, etc.

[repentance]

Actually looks like it could be legit.

I wasn't doubting the legitimacy of the email, although they could have done more to make it not set off my immediate reaction of "phishing scam".

If this request is driven by the requirements of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, I will await with interest to see whether Tradehill is considered to be a reporting entity under that act.

They're all going to have the same issues because the banks are legally bound to require the information.  They're also all going to have to get financial services licences and register for GST eventually too.  

For comparison, here's a link to Paypal Australia's proof of identity requirements (they hold a financial services licence as an authorised deposit taker).

https://www.paypal-education.com.au/aml/personal/index.html

Clause 12 of their Product Disclosure Statement addresses the issue of customers who need to verify their identity.

12.4 If we are required to verify your identity, we are not permitted to provide some or all of our services to you until your identity has been verified in accordance with our obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and Anti-Money Laundering and Counter-Terrorism Financing Rules 2007 (Cth).

12.5 While your identity is being verified, or if we are unable to verify your identity, for example, you have not provided us with documentation to assist us in verifying your identity, we are unable to provide any further services to you. This may mean that:

your ability to send, receive or withdraw funds from your PayPal Account is limited; and
access to your PayPal Account and the funds in your PayPal Account is limited for an extensive period or indefinitely; and
the funds in your PayPal Account are returned to the sender; or
the funds will be subject to the applicable laws regarding unclaimed monies.

https://cms.paypal.com/au/cgi-bin/?cmd=_render-content&content_ID=ua/ProductDisclosure_full&locale.x=en_AU

It's a clause which appears in the PDS of every financial service provider in one form or another.

So what's the problem? If some time ever later authorities want to investigate the transfer which came into some account in New Zealand, and they see it came from the account of the Exchange, they just ask the Exchange about it, and Exchange gives them the account data of where funds came to this account. Each bank transfer has data of the source account, so the Exchange just looks it up in the bank statement. Problem solved, authorities can go on asking the source Russian bank about it. No need to impose additional restrictions on traders.

Verifying the funding account and verifying customer identity are two different things.  The exchanges aren't just arbitrarily imposing "additional restrictions" on traders.  They are required to do this under Australian law and should have been doing so all along.  I'm quite sure that if their accounts holding customer deposits get frozen because they're non-compliant, people will be screaming blue murder about being unable to access their money.