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Author Topic: AML/KYC Explained  (Read 204047 times)
tl150111
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June 16, 2018, 06:30:38 AM

o expand a bit on what all this means at local level.

Services design their own AML/KYC policies and risk management processes with the over-arching guidelines and statutory requirements in mind.  Conventional financial institutions tend to have extremely conservative risk assessment frameworks because they're at risk of fines in the hundreds of millions if they're found to be non-compliant.

The risk assessment/management procedures individual institutions use are developed by them.  They get to decide which customers and what transactions are "high risk" and can and do choose to cease providing services to high risk accounts rather than apply enhanced AML/KYC compliance procedures to those accounts.  They are under no legal obligation whatsoever to allow you to operate a high risk account and don't have to justify a refusal to do so (under some circumstances, they may even be prohibited from giving you a specific reason).

Compliance is a huge administrative burden for financial institutions and it's both cheaper and easier for them to dump accounts/customers who add to that burden.  They not only don't care if you take your business elsewhere, they actively want you to do so - they want your accounts to be someone else's headache.

When your financial institution refuses to process a transaction or closes your account, they are not telling you what to do with your money.  They don't actually give a fuck what you do with your money.  What they're doing is refusing to act as the middleman in transactions which expose them to potential liability.  Any fees they might have earned from that transaction pale into insignificance compared to the fines which allowing a single transaction which breaches AML/KYC requirements can attract (it's 11 million per breach here in Australia for a corporation and a single transaction can involve multiple breaches).  It's not about your right to send funds to potentially flaky Bitcoin services or Nigerian "princes" - it's about their right (and, to a large extent, obligation) to not involve themselves in high risk transactions.

People in general greatly over-estimate their importance as customers to financial institutions.  You may believe that you're giving them "a lot of business", but in the overall context of their operations you're not bringing them enough profit to justify the risks involved in servicing your account.  They can always find low risk customers to replace you.
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bongnor531
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June 16, 2018, 12:29:21 PM

Hi! Is someone maybe aware of a trustworthy company that does KYC? I am looking for one with good reputation with reasonable pricing. Data storage is also an important issue. Thanks in advance!
phuongthai
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June 17, 2018, 06:07:10 AM

KYC I find it very necessary for the Blockchain project ... It guarantees the rights of investors..Deep the phishing situation
qwertyqwerty
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June 18, 2018, 06:04:27 PM

It's precisely, also even you, me, or anybody can make an ICO and harvest for selling the information that we get by that, that's very bad for usual people
markiz73
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Translations EN->RU https://goo.gl/wYojT5


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June 20, 2018, 09:44:35 PM

I do not know what they say professors, experts and other assholes about the AML/KYC.
But in darknet now a lot of personal information is sold for 5-10 dollars per package, and wholesale is much cheaper, thanks to ICO. Now scammers are actively using it to get free profits.
Millions of packages of up-to-date personal information. Now on these bots you can draw up any activity.

ЛУЧШИE КУPCЫ OБMEHA КPИПTOBAЛЮT.БЫCTPO. BЫГOДHO.УДOБHO
OБMEHHИК ПPOBEPEH ЛИЧHO, ПOЛЬЗУЮCЬ ДABHO. ГЛABHOE ЧИTAЙTE OTЗЫBЫ O ПAPTHEPAX!
crypki21
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June 21, 2018, 02:22:00 PM

It might have some negative aspects as mentioned above. But in general, supposing good faith, KYC is a good thing in my view. It makes the whole ICO process more trustworthy and could lead to cut out suspicious scammers in a certain extent.
f12345
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June 22, 2018, 04:32:53 AM

I believe most US based entities would have to check OFAC sanctions list compliance to make sure customer is not involved in illicit activities. Circle must already be compliant imho.
ArunTomar
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June 22, 2018, 06:43:45 AM

what is KYC. Who  required KYC, how it can be done.
Very well explained in this post. Thanks for sharing this information
JopToto
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June 22, 2018, 07:40:58 PM

In some sites, KYC is abusive. I mean websites without USD can avoid this method because we have already proove our ID when we have bougth Bitcoin before.
whitewolfofcoinstreet
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June 22, 2018, 08:55:53 PM

KYC/AML does protect from fraud but mostly protects the companies who follow them from liability though some actually do use it to protect their clients. SOME...
DonnieMitchel
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June 23, 2018, 07:19:11 PM

a very useful article for beginners
darasinmi4show
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June 25, 2018, 08:40:57 PM

The kyc means know your costumers how kyc is very good if they can really work on the process of getting people verify in time. Also, many people now complaint great about lost of their reward in this process of kyc not get verify. Am little advice to them is that they should just work on the kyc process and things will get better on it.

@DiscoveryIoT
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June 26, 2018, 03:29:22 PM

thanks  Grin
Anthrlive
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June 28, 2018, 11:09:25 PM

While already very overcomplicated, these systems don't seem to me like a very secure way to identify investors. There are still a dozen ways that some devious people can find loopholes in the system, and all the while people who are truly legit suffer constantly and have their credentials under scrutiny. Some countries and banks are totally out of luck, even though these people have no other options.
This situation really reminds me of the DRM (Digital Rights Management) implementation in videogames. For those who don't know, DRM is implemented to combat piracy, but instead it just makes it a little harder and takes a little more time for pirates to steal games. At the same time DRM makes many computers of legit users underperform or don't run the games altogether, which makes prospective buyers avoid games with DRM implemented. Don't you see the irony?
Aurora2
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June 29, 2018, 05:54:48 PM

What is KYC ?

Know your customer (KYC) refers to due diligence activities that financial institutions and other regulated companies must perform to ascertain relevant information from their clients for the purpose of doing business with them. The term is also used to refer to the bank regulation which governs these activities. Know Your Customer processes are also employed by companies of all sizes for the purpose of ensuring their proposed agents', consultants' or distributors' anti-bribery compliance. Banks, insurers and export credit agencies are increasingly demanding that customers provide detailed anti-corruption due diligence information, to verify their probity and integrity.


Who has to enforce KYC ?

Know your customer (KYC) falls under the responsability of each financial institution and/or regulated company.

The regulations require these entities to adopt KYC procedures.  It assists them in knowing / understanding the customers and their financial dealings better to monitor their transactions for identification and prevention of suspicious transactions.


KYC Recommendations

KYC controls typically include the following:

- Collection and analysis of basic identity information (referred to in US regulations and practice a "Customer Identification Program" or CIP)
- Name matching against lists of known parties (such as "politically exposed person" or PEP)
- Determination of the customer's risk in terms of propensity to commit money laundering, terrorist finance, or identity theft
- Creation of an expectation of a customer's transactional behavior
- Monitoring of a customer's transactions against their expected behaviour and recorded profile as well as that of the customer's peers

KYC Jurisdiction and Locality

KYC regulations are local, and differ from country to country. Jurisdiction is also, on a coutry to country basis.

To know more about your specific country, visit: http://kycmap.com


KYC and Bitcoin Exchanges

Stricter KYC policies:

Bitstamp   https://www.bitstamp.net/privacy-policy/
Bitfinex       https://www.bitfinex.com/pages/tos  or refer inquiries to compliance@bitfinex.com
BTCChina   (only since new PBOC guidance, Dec 2013) (link?)
Cavirtex   https://www.cavirtex.com/faq
Coinbase    https://coinbase.com/legal/privacy
Kraken       https://www.kraken.com/legal/verification (their General Counsel, Constance Choi is a well known specialist in the Regulatory and Compliance field)
Cryptonit    https://cryptonit.net/regulations


Loose or non-existant KYC policies:

BTC-e   (??)
Crypsty   (??)
LocalBitcoin (p2p based, limited KYC?)




What is AML?

Standing for "Anti-money Laundering", it is a set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions. In most cases money launderers hide their actions through a series of steps that make it look like money coming from illegal or unethical sources was earned legitimately.

Who has to enforce AML?

In response to mounting concern over money laundering, the Financial Action Task Force on Money Laundering (FATF) was established by the G-7 Summit that was held in Paris in 1989.

The Task Force was given the responsibility of examining money laundering techniques and trends, reviewing the action which had already been taken at a national or international level, and setting out the measures that still needed to be taken to combat money laundering. In April 1990, less than one year after its creation, the FATF issued a report containing a set of Forty Recommendations, which provide a comprehensive plan of action needed to fight against money laundering.

The FATF calls upon all countries to take the necessary steps to bring their national systems for combating money laundering and terrorism financing into compliance with the new FATF Recommendations, and to effectively implement these measures.

Again, as in the case of KYC, financial institutions and/or regulated companies are responsible for the implementation of internal AML policies.

AML Jurisdiction and Locality

AML regulations are also local, and differ from country to country. Some countries choose a top-down approach, inheriting much of their AML policies from the FATF, while others go for a bottom-up approach and then have to reconcile both policies. Extreme countries where such reconciliation is impossible (generally due to Government unwillingness) are excluded from the FATF membership, with the corollary of increased complications to access the international markets and financing.

For a full list of FATF members, visit:         http://en.wikipedia.org/wiki/Financial_Action_Task_Force_on_Money_Laundering

AML and Bitcoin Exchanges

Currently in compliance:

Bitstamp   https://www.bitstamp.net/aml-policy/
Bitfinex      https://www.bitfinex.com/pages/tos or refer inquiries to compliance@bitfinex.com
Cavirtex   https://www.cavirtex.com/why_virtex#proactively_working
Coinbase    https://coinbase.com/legal/privacy
Kraken       https://www.kraken.com/legal/aml (their General Counsel, Constance Choi is a well known specialist in the Regulatory and Compliance field)
Cryptonit    https://cryptonit.net/regulations

Unknown status:

BTCChina   (unclear since new PBOC guidance, Dec 2013) (are they financial institutions?)
BTC-e   https://btc-e.com/page/1
LocalBitcoin (p2p based, limited or no AML?)



WARNING:
Assume that restrictions for any Bitcoin to National Currency exchange may become more restrictive at any time in the future. Many exchanges in the past have restricted currency deposits or withdrawals proactively as BitStamp has, without any explicit order from a government agency to do so at the time. Others like BTCChina have in response to concerns made even the ability to continue to login to their platform contingent on supplying further identifying information. In the past surprise changes to AML/KYC requirements have lead users of exchanges to have their access to deposited funds substantially delayed while complying with new requirements or even lost access to their deposited funds completely if they could not comply with the new requirements. Changing AML/KYC exchange enacted AML/KYC requirements have affected users of all major exchanges that handle both Bitcoin and National currency. People who continue using such exchanges should prepare for the contingency that their exchange of choice will change their AML/KYC requirements in the future.
Isaremj3
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June 30, 2018, 06:36:16 PM

Sometimes people do misunderstand what kyc mean and they use to run from project when they see kyc. However, the meaning know your customers that is the team we know where the participate are from, I mean the participate in both the ICO and Bounty.   All, this information help a lot .
elpape225
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June 30, 2018, 08:25:44 PM

OptiToken almost done with ico, who got moon tickets
Tungnguyenmmo
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July 01, 2018, 02:50:59 AM

The guide is very an easyt-to-understand one. I saw KYC and AML terms in white papers and then I made google search about them. But the results were not simple. Your explanation is nicely done thank you.
nghihuynh2018
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July 01, 2018, 06:34:26 AM

We knew that KYC/AML will be one of the main reasons why the regulators and government will ban or accept crypto currencies
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July 02, 2018, 08:50:07 PM

I saw most of the bounties using KYC these days. are they really necessary? bounty hunters are not investors.how can they laundering money by doing bounties.
I have the same question, because, if i help to spread information about project and i am not investor, why should i go through KYC? And the answer, i think, that managers have chance not to pay you, because sometimes you just can't do KYC.

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