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Author Topic: AML/KYC Explained  (Read 173076 times)
John Wick
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June 21, 2017, 08:07:37 PM
 #81

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.
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July 14, 2017, 08:23:50 PM
 #82

Reading the main post, I realized that here in my country many financial institutions are now implementing the same procedures. Even small pawnshops here have their own Know Your Pawner which is the same as KYC. I think this really has something to do with money laundering issues especially connected with drugs and terrorism, among many other factors.

That's the argument the government uses, don't fall for it. It's actually all about control. In the USA the Department of Justice created the modern asset forfeiture in the 80s with the intent to actually get large drug lords. This has turned into a nightmare of even local police able to confiscate nearly anything they want and force the citizens to have to fight to get their own property back - at their expense! It's so bad that the head of the department that created asset forfeiture as we know it, and his successor, have spent years trying to stop the practice.   I view the KYC rules in the same light... far overreaching rules that hinder the rights of the average citizen.


https://www.washingtonpost.com/opinions/abolish-the-civil-asset-forfeiture-program-we-helped-create/2014/09/18/72f089ac-3d02-11e4-b0ea-8141703bbf6f_story.html

Also even our own government didn't use KYC when they were giving suitcases of money - 12 billion USD - to who knows who in various hotspots around the world....
https://www.theguardian.com/world/2007/feb/08/usa.iraq1





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July 15, 2017, 04:06:24 AM
 #83

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.

KYC is everything that is wrong with the block chain is it not? no privacy or animosity ! Dont get me wrong i am all for the KYC.

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August 15, 2017, 03:22:19 PM
 #84

I'd like to propose some changes to KYC/AML rules.  Criminals have been known to use their ill gotten gains to eat at restaurants and shop in grocery stores.  I guess criminal activity can work up an appetite.  It is incumbent upon restaurants to ensure that the money their customers are paying has come from legitimate sources.  All restaurants should ask for ID and a utility bill before serving customers.  They also need to ask their customers for their employer information and annual income.  Self employed customers can produce a business license or other such documentation to prove the legitimacy of their income.  Grocery stores also need to comply with these rules but in addition, grocery stores should ask for social security numbers as well.  Maybe then we can protect children and fight Al Qaeda ISIS.  

Government AML regulations put the burden on financial institutions, not regular businesses.  Many banks are choosing not to accept anonymous cash deposits into bank accounts... such as JP Morgan Chase, which now only allows people to deposit cash into their own account.

Any cash deposit or cash withdrawal of more than $10,000 is required to be reported to the Federal government.




This is such a nonsense, you're really controlled at the end of the day, i hope we will not get same issues with coinbase or other exchanges operation in USA or EU
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August 18, 2017, 06:09:17 PM
 #85

If you trade on exchanges, your coins are always at risk as far as your anonymity goes. If the exchange suddenly changes their AML and KYC laws, and you cannot comply, say goodbye to your money. Many people told others to just use a fake id number on okcoin, but now sometimes they require you to upload and verify to withdraw, which they know many can't do since they numbers don't match up. Bitflyer has seized my funds and won't let them go Sad
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August 30, 2017, 05:18:13 PM
 #86

I'd like to propose some changes to KYC/AML rules.  Criminals have been known to use their ill gotten gains to eat at restaurants and shop in grocery stores.  I guess criminal activity can work up an appetite.  It is incumbent upon restaurants to ensure that the money their customers are paying has come from legitimate sources.  All restaurants should ask for ID and a utility bill before serving customers.  They also need to ask their customers for their employer information and annual income.  Self employed customers can produce a business license or other such documentation to prove the legitimacy of their income.  Grocery stores also need to comply with these rules but in addition, grocery stores should ask for social security numbers as well.  Maybe then we can protect children and fight Al Qaeda ISIS.  

Government AML regulations put the burden on financial institutions, not regular businesses.  Many banks are choosing not to accept anonymous cash deposits into bank accounts... such as JP Morgan Chase, which now only allows people to deposit cash into their own account.

Any cash deposit or cash withdrawal of more than $10,000 is required to be reported to the Federal government.




This is such a nonsense, you're really controlled at the end of the day, i hope we will not get same issues with coinbase or other exchanges operation in USA or EU
Dealing with exchanger is the common thing to consider when doing trader because it is the actual way of earning on trading and it is the only way where you cod now whenever to have an option on regards to the value of Bitcoin and also the transactions in the block chain that always affect bitcoin development.

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August 31, 2017, 06:34:08 AM
 #87

I'd like to propose some changes to KYC/AML rules.  Criminals have been known to use their ill gotten gains to eat at restaurants and shop in grocery stores.  I guess criminal activity can work up an appetite.  It is incumbent upon restaurants to ensure that the money their customers are paying has come from legitimate sources.  All restaurants should ask for ID and a utility bill before serving customers.  They also need to ask their customers for their employer information and annual income.  Self employed customers can produce a business license or other such documentation to prove the legitimacy of their income.  Grocery stores also need to comply with these rules but in addition, grocery stores should ask for social security numbers as well.  Maybe then we can protect children and fight Al Qaeda ISIS.  

Government AML regulations put the burden on financial institutions, not regular businesses.  Many banks are choosing not to accept anonymous cash deposits into bank accounts... such as JP Morgan Chase, which now only allows people to deposit cash into their own account.

Any cash deposit or cash withdrawal of more than $10,000 is required to be reported to the Federal government.




This is such a nonsense, you're really controlled at the end of the day, i hope we will not get same issues with coinbase or other exchanges operation in USA or EU

Chase is getting worse with cash deposits. They now request your ID when putting cash into your own account. It's a business account, businesses take cash for work. Oddly enough if I use the ATM and do a cash deposit no ID is required. Or a night deposit.  Go to a teller and they'll need an ID. I tried to ask why big brother was so bothersome, the last teller had no idea what I was referring to by big brother.

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August 31, 2017, 07:59:38 AM
 #88


Chase is getting worse with cash deposits. They now request your ID when putting cash into your own account. It's a business account, businesses take cash for work. Oddly enough if I use the ATM and do a cash deposit no ID is required. Or a night deposit.  Go to a teller and they'll need an ID. I tried to ask why big brother was so bothersome, the last teller had no idea what I was referring to by big brother.

The ID is not required because
they have a camera there and they can send your picture to a service that can identify you from a image
if required. Wink

Also if you have some card or magnet key that you have to sweep over
some sensor to open the ATM box for depositing cash
then you are already identified.

You don't have to wary is all done for "your safety"  Cool

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August 31, 2017, 12:39:05 PM
 #89


Thanks for sharing,

But i think that Aml/Kyc it's just a formality & does Not protect anyone from being scammed. As you all must be knowing about MtGox, the biggest fraud done under Bitcoin World, and even it was complied with Aml/Kyc laws. But this Aml/Kyc does nothing other than shutting down the small Enterprises and other small minded Business who trying to survive here & there. Its just a LOOPHOLE to Escape.
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August 31, 2017, 12:47:58 PM
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Thanks for sharing,

But i think that Aml/Kyc it's just a formality & does Not protect anyone from being scammed. As you all must be knowing about MtGox, the biggest fraud done under Bitcoin World, and even it was complied with Aml/Kyc laws. But this Aml/Kyc does nothing other than shutting down the small Enterprises and other small minded Business who trying to survive here & there. Its just a LOOPHOLE to Escape.


Of course is LOOPHOLE.
This shit is made to control common working people not the
Elite so they can seize your hard earned money in case you rebel.

So what about Panama Papers?
It seem all legal Wink Nobody is mentioning anything like it never occurred.

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August 31, 2017, 05:10:36 PM
 #91


Thanks for sharing,

But i think that Aml/Kyc it's just a formality & does Not protect anyone from being scammed. As you all must be knowing about MtGox, the biggest fraud done under Bitcoin World, and even it was complied with Aml/Kyc laws. But this Aml/Kyc does nothing other than shutting down the small Enterprises and other small minded Business who trying to survive here & there. Its just a LOOPHOLE to Escape.


Of course is LOOPHOLE.
This shit is made to control common working people not the
Elite so they can seize your hard earned money in case you rebel.

So what about Panama Papers?
It seem all legal Wink Nobody is mentioning anything like it never occurred.

The Panana Papers didn't have many from the USA in it, was mostly european. I've heard a few passing comments on some getting in trouble but that's not where I get most of my news.

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September 01, 2017, 11:05:02 AM
 #92

Almost every company , lawyer etc needs KYC today in order to work with you
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September 02, 2017, 12:20:29 PM
 #93

What about bittrex? Does the exchange comply with Aml/kyc? I am very loaded there and the fact that they never had any issues makes me complacent.

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September 07, 2017, 05:56:37 AM
 #94

Almost all Chinese exchanges required it since last year, I think

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September 12, 2017, 03:55:23 PM
 #95



Chase is getting worse with cash deposits. They now request your ID when putting cash into your own account. It's a business account, businesses take cash for work. Oddly enough if I use the ATM and do a cash deposit no ID is required. Or a night deposit.  Go to a teller and they'll need an ID. I tried to ask why big brother was so bothersome, the last teller had no idea what I was referring to by big brother.

Usually, banks institute these kind of rules when something has gone wrong - so I'm guessing they had someone deposit a bunch of cash who shouldn't have, and they got chewed over by the govt over it. The response of the bank is always to do arse-covering so that in future they can't be chewed out, and that's how these draconian rules get started.

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September 15, 2017, 02:56:13 PM
 #96

Look if they become big enough - and to me they look like they will - cryptocurrencies will have to have effective KYC/AML incorporated in some way. I don't think governments will care if it's at the exchange level - so every exchange does a reasonable job at KYC - or however. What they will care about is not having a significant percentage of financial flows - rather than the tiny and trivial percentage cryptos represent now - happening without them being able to know who the recipients are.

To me it's blindingly obvious that terrorists funders will - probably are - use cryptocurrencies to fund terrorists. This can't continue as cryptocurrencies  become increasingly adopted. There will have to be identification of people on each side. Just wait until half a dozen people are murdered in Paris, or Berlin, or London, or wherever, and the investigation shows that the attacker was funded with Bitcoin. The regulators won't play games then.

Just my view, possibly wrong.
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September 16, 2017, 01:38:10 AM
 #97

Very good article, thank you!
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September 16, 2017, 03:35:03 PM
 #98

Almost every company , lawyer etc needs KYC today in order to work with you

Ya but I look forward to how it will be attempted to be applied to cryptocurrencies because it is very hard to get someones private keys and force them to move it.
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September 16, 2017, 03:46:45 PM
 #99



Chase is getting worse with cash deposits. They now request your ID when putting cash into your own account. It's a business account, businesses take cash for work. Oddly enough if I use the ATM and do a cash deposit no ID is required. Or a night deposit.  Go to a teller and they'll need an ID. I tried to ask why big brother was so bothersome, the last teller had no idea what I was referring to by big brother.

Usually, banks institute these kind of rules when something has gone wrong - so I'm guessing they had someone deposit a bunch of cash who shouldn't have, and they got chewed over by the govt over it. The response of the bank is always to do arse-covering so that in future they can't be chewed out, and that's how these draconian rules get started.

haha of course people that work there aren't going to know what big brother is, they are part of big brother. But yes absolutely they are great at covering up.

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September 19, 2017, 01:23:19 PM
 #100

Interesting article Grin

I have been exposed to the system of KYC and somehow i find it a bit uneasy, since i have been ask to take selfies
, just to prove that we have possession of the card i think... when i rarely take a selfie Embarrassed
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