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Author Topic: Determinations of KYC and AML  (Read 307 times)
sheenshane
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August 28, 2018, 02:02:16 PM
 #21


Do not invest in ICOs "no one will force you to invest" unless you trust who is behind those projects.
But there are some projects that at the first run of their ICO's project they didn't ask personal data or KYC/AML but when the tokens are distributed at that time they ask you to pass a personal data. I hate that kind of project proposal but you don't have any choice just to pass your KYC or you didn't credit your token that your investment.
If you are investors or bounty hunters must be select a project that hasn't implemented KYC to avoid sharing your personal data.

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August 28, 2018, 02:52:17 PM
 #22

So after implementing KYC/AML, does a business have to meet other requirements for all countries that have individuals who may participate?

Yes. KYC/AML procedures are only really for anti money laundering compliance. There may be other laws that need to be observed depending on the jurisdiction.

What I mean by outsourced is there are a lot of companies that you link to your ICO website that will validate users and make sure they meet KYC/AML. Hence putting the responsibility of the user's data on them.

I don't exactly get what you're saying, but yes, a third party can do the validation for an ICO. I'm not sure if they can take sole and full responsibility of the data though.
It looks like I will reach out to a crypto lawyer.
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August 28, 2018, 03:41:41 PM
 #23

Thanks for the information everyone. Why do some ICOs restrict the US and certain territories?

Because in some territories ICOs are either illegal or legal grey areas.

For example as soon as founders allow US citizens to take part in an ICO, without actively seeking out the SEC's approval or abiding its regulation, the SEC will have a close eye on them; legal problems being almost assured regardless of the founder's country of origin or operation.
Is there a document that has a list of countries  and regulations required?

There's a short overview of the regulatory status of ICOs in various jurisdictions on Wikipedia:
https://en.wikipedia.org/wiki/Initial_coin_offering

However it's rather incomplete and doesn't do the complexity of the issue justice. International law is no joke. It gets bad when finance is involved and even worse when looking at unprecedented asset classes such as cryptocurrencies and ICO tokens.


It looks like I will reach out to a crypto lawyer.

If you plan on starting on ICO, professional legal support will be indispensable. Whether it's worth the money when merely investing depends on the size of your investment though, I guess.

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August 28, 2018, 04:01:10 PM
 #24

i'm going to consult with LegalZoom. has any ICO ever used LegalZoom for ICO services on legal matters?
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August 29, 2018, 06:55:48 AM
 #25

i'm going to consult with LegalZoom. has any ICO ever used LegalZoom for ICO services on legal matters?

I tried looking for some but couldn't find any. I did find these reviews though which may be troubling lol. Either way, you need professional advice, and while you're technically not hiring a lawyer, LegalZoom can still provide it. It should be fine.

I'd like to note that trying to save on legal fees might bite you in the ass later though, especially if you're starting an ICO where lots of things could potentially go wrong.

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August 29, 2018, 12:20:20 PM
 #26

After they established a legitimate business in their country of origin it will always depend on where they will promote and locally launch their ICOs, most of the cases (not all countries) where there have a local representative promoting their ICO on that country they will be required to exercise KYC but it always depend on the country's rules and regulation. But a lot of ICO developers are already avoiding this just by promoting their ICOs internationally where there is no governing body that will prohibit them on not requiring ICOs, just like what happened to Thailans were ICO sales and promotions are banned but it is not stopping their citizens on participating ICO sales internationally.

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August 29, 2018, 04:14:08 PM
 #27

i'm going to consult with LegalZoom. has any ICO ever used LegalZoom for ICO services on legal matters?

I tried looking for some but couldn't find any. I did find these reviews though which may be troubling lol. Either way, you need professional advice, and while you're technically not hiring a lawyer, LegalZoom can still provide it. It should be fine.

I'd like to note that trying to save on legal fees might bite you in the ass later though, especially if you're starting an ICO where lots of things could potentially go wrong.
Thanks for the post. Those reviews aren't good at all, so legalzoom wont be the option. I'm trying to use the most cost effective way until I'm able to get funding. Right now, everything is being done by me. After I complete the WP, and Landing page, I can then consult with legal on the best route as far as where to register, KYC, and AML.
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August 29, 2018, 04:24:40 PM
 #28

KYC / AML is a due diligence process that allows companies to verify the identity of their customers, ensure that the money they want to send is legally obtained and that the customer is not part of the sanctions list, a criminal, a terrorist, or a corrupt organization.

Why is this important? Regulators around the world are increasingly interested in ICOs. This can create uncertainty for cryptocurrency projects and their investors. Although national laws are sometimes absent or unclear, Know Your Customer (KYC) is a universal concept that is widely understood in global finance.

Voluntarily complying with KYC regulations provides many benefits to the company and its investors, even if they are not currently explicitly mandated to enforce the process.

In other words, KYC / AML is a priority to protect contributors and clients, which is why many ICO decide to implement the KYC / AML process.
Why aren't anonymous sites using KYC/AML? It seems like people are still using them. Better yet, are all ICOs requested to register the company?
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August 29, 2018, 04:32:28 PM
 #29

After they established a legitimate business in their country of origin it will always depend on where they will promote and locally launch their ICOs, most of the cases (not all countries) where there have a local representative promoting their ICO on that country they will be required to exercise KYC but it always depend on the country's rules and regulation. But a lot of ICO developers are already avoiding this just by promoting their ICOs internationally where there is no governing body that will prohibit them on not requiring ICOs, just like what happened to Thailans were ICO sales and promotions are banned but it is not stopping their citizens on participating ICO sales internationally.
Is there a complete list of countries that have banned ICOs. I'm working on a sports platform and seeking which countries to blacklist. In addition, it seems like there is no way to block participants as VPNs can be used.
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August 29, 2018, 04:43:46 PM
 #30

In addition to what others have said, usually they have legal experts who they seek advise. So at the beginning there are ICO which doesn't require any KYC's but when the tokens are about to distributed, other's suddenly asking for KYC's just to make sure that they are following all regulations and they need to adapt, otherwise if might have a big implications later. Its just sad though that it was not intimated at the very beginning so that investors or bounty hunters not comfortable sharing their personal data will not invest or join that ICO project.


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August 29, 2018, 07:47:42 PM
 #31

In addition to what others have said, usually they have legal experts who they seek advise. So at the beginning there are ICO which doesn't require any KYC's but when the tokens are about to distributed, other's suddenly asking for KYC's just to make sure that they are following all regulations and they need to adapt, otherwise if might have a big implications later. Its just sad though that it was not intimated at the very beginning so that investors or bounty hunters not comfortable sharing their personal data will not invest or join that ICO project.


ARe you saying that most ICOs dont start with KYC and AML; they do it later?
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August 29, 2018, 09:23:15 PM
 #32

Have you heard of OST KYC? If so, what are your thoughts?
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August 30, 2018, 07:49:06 AM
 #33

Thanks for the information everyone. Why do some ICOs restrict the US and certain territories?

Because in some territories ICOs are either illegal or legal grey areas.

For example as soon as founders allow US citizens to take part in an ICO, without actively seeking out the SEC's approval or abiding its regulation, the SEC will have a close eye on them; legal problems being almost assured regardless of the founder's country of origin or operation.
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August 30, 2018, 08:10:14 AM
 #34

Thanks for the information everyone. Why do some ICOs restrict the US and certain territories?

Because in some territories ICOs are either illegal or legal grey areas.

For example as soon as founders allow US citizens to take part in an ICO, without actively seeking out the SEC's approval or abiding its regulation, the SEC will have a close eye on them; legal problems being almost assured regardless of the founder's country of origin or operation.
So would you say it's best to not allow U.S. Citizens to participate? How did Digitex Futures do their ICO and avoid scrutiny?
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August 30, 2018, 03:30:25 PM
 #35

The KYC or AML process is now standard practice for any legitimate ICO looking to raise funds. These processes not only benefit the project implementing them but also help to protect those with interests within the project.

Even though the crypto space is largely unregulated, it doesn’t mean that we can’t behave and conduct ourselves as any normally regulated sector. It’s all of our responsibility to ensure that we protect the ICO and crypto space as stakeholders. In order to do that, ICOs and projects need to implement a KYC or AML process.
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August 30, 2018, 04:02:56 PM
 #36

The KYC or AML process is now standard practice for any legitimate ICO looking to raise funds. These processes not only benefit the project implementing them but also help to protect those with interests within the project.

Even though the crypto space is largely unregulated, it doesn’t mean that we can’t behave and conduct ourselves as any normally regulated sector. It’s all of our responsibility to ensure that we protect the ICO and crypto space as stakeholders. In order to do that, ICOs and projects need to implement a KYC or AML process.
I agree, but wouldnt you say there are added risk to collecting data of users. Lets say the data gets breached; what's next? Wouldn't the company implementing the KYC/AML be held liable. Also, instead of doing kYC/AML why not just restrict the companies that require them; primarily US and China.
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August 30, 2018, 04:40:17 PM
 #37

AML / KYC compliance policies act as double edge swords; First, on the one hand, ICO helps to verify and validate their investor identity, document investor profiles, types of business and financial activities and finally assess potential risks for money laundering activities; keep the good side of the law.

On the other hand, the blockchain system encourages decentralized autonomy and has become the reason for many investors from various cadres who are interested in that in the first place. With privacy policies, regulations and identity verification, this potential whale is lost and causes losses in the financial resources of the ICO project concerned.

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August 30, 2018, 07:32:49 PM
 #38

AML / KYC compliance policies act as double edge swords; First, on the one hand, ICO helps to verify and validate their investor identity, document investor profiles, types of business and financial activities and finally assess potential risks for money laundering activities; keep the good side of the law.

On the other hand, the blockchain system encourages decentralized autonomy and has become the reason for many investors from various cadres who are interested in that in the first place. With privacy policies, regulations and identity verification, this potential whale is lost and causes losses in the financial resources of the ICO project concerned.
How was Digitex Futures successful without implementing KYC?
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August 31, 2018, 03:54:59 AM
 #39

What determines if an ICO requires KYC and AML?

It depends on the country that the ICO is operating from, and the citizens that it is offering its investment scheme to (that's why you see some ICOs banning certain country's citizens to participate).

While I'm not sure what the exact procedures are, most legitimate ICOs nowadays in countries with more mature crypto ICO regulations will ask you for KYC docs such as your ID, as well as AML docs, perhaps fund sources.

At the end of the day, the ICO itself is probably not even in that much control when it comes to the collection of the docs. The regulators in each country decides whether these investments are legal, what they are classified under, and what procedures are.

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August 31, 2018, 07:35:37 AM
 #40

The KYC or AML process is now standard practice for any legitimate ICO looking to raise funds. These processes not only benefit the project implementing them but also help to protect those with interests within the project.

Even though the crypto space is largely unregulated, it doesn’t mean that we can’t behave and conduct ourselves as any normally regulated sector. It’s all of our responsibility to ensure that we protect the ICO and crypto space as stakeholders. In order to do that, ICOs and projects need to implement a KYC or AML process.
I agree, but wouldnt you say there are added risk to collecting data of users. Lets say the data gets breached; what's next? Wouldn't the company implementing the KYC/AML be held liable. Also, instead of doing kYC/AML why not just restrict the companies that require them; primarily US and China.

Yes, there's a big risk on investors or even bounty hunters if ever such hacks occurs:

https://www.reddit.com/r/CryptoCurrency/comments/83ybwn/shady_dadi_ico_server_got_hacked_huge_data_breach/

https://thenextweb.com/hardfork/2018/02/07/sentinel-chain-ico-leak-passport/

Of course the project or company should be held accountable because you put trust in them that they are going to secure your personal data. I guess ICO than are requiring KYC now are making it more riskier on our end.

I think some ICO's are also doing some restrictions as well. You can't join if you are amongst the country they don't allowed.

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