Bitcoin ATM network - compliant with AML/KYC

[CoinATMRadar]

I would like to discuss the following topic: in order to bring Bitcoin to public - it should be simple and easily available.
Forgetting about mining, right now there are not many options to get bitcoins - buy from someone personally, buy on exchanges, buy in ATM.

I would like to discuss the latter option. Nowadays many ATMs are coming in different countries, looks like 2014 could be a year of bitcoin ATMs according to news. I created a simple one page site to track those ATMs on the map - http://coinatmradar.com. But there is consistent problem with providing ATM services - regulation. The clients should be identified for KYC/AML policies.

Some ATMs (I think Robocoin ones) may use webcam to get user photos, scan ID documents or even taking finger prints. The lamassu vending machines don't give those rich functions, and sometimes the data collecting function becomes crazy, e.g. for the recently installed lamassu ATM in Albuquerque - the owner of the cigar bar was sitting near the machine and collecting personal data of people who bought bitcoins using his laptop.

I agree that there should be AML/KYC policies in place, I don't really see a way for the network to grow without obeying those regulations, but why  those two functions (person identification and actual depositing/purchasing) are not split? I mean - this is a bit strange idea to apply identification by ATM: I may close the camera not to take a pic of me, may scan some fake IDs etc. But if there is a service that provides the AML beforehand, e.g. you can register with them and provide identification (like it is done on exchanges) and then having the individual account of such a service, I could deposit money in order to buy bitcoins.

That would become similar to putting money on mobile account or pay bills using those already existing cash machines. For this even no ATMs would be needed to install, those existing networks of machines could be used, there would just new receiver in the list should be added.

I have not heard of any of those services. Is there any flaw in my logic? I think it could give a real boost in adopting bitcoins.

[LiteCoinGuy]

thanks for that site. if you can keep it up to date, its great!

[CoinATMRadar]

thanks for that site. if you can keep it up to date, its great!

Thanks for kind words. Sure will try to keep it up-to-date, that was the initial idea Just added the first bitcoin ATM in Spain from Pay MaQ.

But my post initially was about the way ATMs or similar machines could be working fully legally in current regulatory requirements and be an easiest way for users.
Any ideas about the idea suggested above?

[Coinster]

Hi CoinATMRadar,

Nice site. I've added it to Coinster

Regarding your question I think you have a point. The functions of identity and ATM access could be split. I think we'll see that start to happen naturally as things progress. For example, opening a bank account usually requires two forms of ID. Well, one form of ID is a bank card from another bank. I think we'll see this in the Bitcoin ecosystem too, where customers that have gone through KYC at an exchange may have automatic access to some ATMs.

One tricky part of that is some jurisdictions require different levels of identification. Robocoin is set up to handle this well. They provide the ability to do KYC in the toughest regulatory environment, the US, with machine options to take email, palm vein, gov ID, and face. Apparently a palm vein scan is like a thumbprint, unique and hard to forge. Robocoin lets operators turn on or off the features required for their jurisdiction. So for Robocoins in Canada, for example, I believe the only thing required is the palm vein scan.

[CoinATMRadar]

I think we'll see that start to happen naturally as things progress. For example, opening a bank account usually requires two forms of ID. Well, one form of ID is a bank card from another bank. I think we'll see this in the Bitcoin ecosystem too, where customers that have gone through KYC at an exchange may have automatic access to some ATMs.

Here is another interesting thread about this
http://www.reddit.com/r/Bitcoin/comments/1yosor/robocoin_is_collecting_biometric_scans_from_all/

Right now the maximum AML procedures of Robocoin (activated in US) are:
- mobile number confirmation
- camera photo + ID document scan (manual procedure)
- palm veins scan

As far as I understand identification happens by staff of Robocoing by verifiying the photo and document scan.
The palm vein scan is used for obeying the limits in the ATM. And this is exactly what many people complain about. And I would be skeptical myself as well to provide this. No bank requires any of this, why should I provide it to someone whom I don't really know well.

I think the identification should happen in similar way as it happens on BitStamp for example (you send doc + address verification). Not sure about US exact requirements, but if there are problems accepting those online, potentially there could be offices/branches, which would be similar to opening bank account in a bank.

Then there is a question of limiting transactions for particular person per some period of time. But this could easily be achived by attaching some particular bitcoin address to my robocoin account, means I could deposit money only on this particular address and they could control the limits easily.

Initially I was thinking about some kind of existing networks, because it would be a real boost. In Russia bitcoins are banned, and this is not an option. But as an example they have huge network of terminals, where people can put money to their mobile, pay to internet providers, pay bills etc. E.g. here an example Qiwi, here is the network in Moscow https://www.qiwi.ru/replenish/terminals.action?lat=55.73421489447054&lng=37.62129170835124&zoom=13&owners=1&owners=16&owners=24

It is already present there, nothing to be installed, only the payment option to be added for bitcoins topping up and that's all, of course given the process is compliant with legal requirements.
Coinkite is developing their own network and potentially could introduce ATMs later as they issue cards, but this is like starting from scratch which is very resource and time consuming process.

[Coinster]

As far as I understand identification happens by staff of Robocoing by verifiying the photo and document scan.
The palm vein scan is used for obeying the limits in the ATM. And this is exactly what many people complain about. And I would be skeptical myself as well to provide this. No bank requires any of this, why should I provide it to someone whom I don't really know well.

I think you have a point there. I think Robocoin is trying to appease US regulators by providing high tech identity verification. Unfortunately ordinary people don't care so much about that, and that's who would use their machines. Here is a currently high voted post on Reddit:

Tried the first Bitcoin ATM in the US tonight, my experience

I've been interested in bitcoin since at least two bubbles ago. I happened to be near the Handlebar bar in Austin tonight, so I thought I'd check out the new Robocoin Bitcoin ATM.

So, I decide I'm going to buy US$20 worth of Bitcoin. I get my $20 bill ready and go to the machine, and tell it I want to buy Bitcoins. How hard can this be? I can buy $20 worth of alcohol at the very same bar in about 20 seconds.

So first it asks me for my cellphone number. Not feeling the anonymity. Sends me an SMS and asks for a verification code.
Then it asks me for my handprint. Immediately I'm feeling like I'm going through US Immigration in an Airport. Still not feeling the anonymity.

Then it asks me for my driver's license. Ok, so now I'm definitely not feeling the anonymity.

Then it tells me that I need to go away and come back in 5 minutes while they approve my account. At this point, and I'm fairly enthusiastic to make this work, I'm thinking "fuck this shit". Meanwhile I've given a company I know very little about my cellphone number, every piece of information on my driver's license, and my handprint.

Then I get a text saying that they can't approve me automatically and it will take longer than 5 minutes. Definitely fuck this shit.

What the hell is the point in having an anonymous decentralized currency if you have to get an anal probe just to exchange some $$$?
I really wonder whether Robocoin are actually forced to do this by law or if they just think that they'll be left alone by the government if they make the process awful enough.

If it's the latter, they might succeed in being left alone, but unless their target market is the unlikely intersection between hardcore bitcoin enthusiasts and those that enjoy privacy-killing tedious anal probes, they are in big trouble as a company.