public Q to MagicalTux: what will you do if one can not prove where he lives?

[miernik]

MagicalTux, I want you to answer this question publicly, so everybody knows and can make informed decisions weather to deal with you:

In one post https://bitcointalk.org/index.php?topic=54221.msg646827#msg646827 you said: "Any document that proves you live at the address listed. A recent utility bill usually does the trick. A bank statement wouldn't as banks are not required to check you live where you get those sent. The registered address on an ID card wouldn't do either as most countries do not require you to update it if you move to somewhere else."

That is about what is required by MtGox to verify an account frozen by your AML team. So, lets say a customer opens an account, accesses the website through a VPN/TOR/whatever you think is a suspicious IP, deposits Bitcoin or MtGox code, and bach... your AML team flags the account and freezes it. You require ID (fair enough) and "proof of address" with your more-strict-then-any-bank rules. And here is the problem:

Customer can provide a passport, even notarized/Apostille/whatever, OK.

But the customer can't provide a proof of address. Simply has no way to go through this. This can be for various reasons, easy to imagine that lots of people will have no way to provide that to satisfy your rules. People who don't "officially" live anywhere, sleep at friends house, or outside, are in a country which won't issue them a "residency certificate" because they are ineligible for it, etc, lots of other reasons can be.

The only thing he can provide is a passport, plus maybe a birth certificate, let it be they are Apostille'd. Period, that's all the customer can provide.

What will you do next?

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[RaggedMonk]

What they should do is mail something (a verification code) to the residency address the user provided, with instructions to access a particular webpage to verify.

[DeathAndTaxes]

What they should do is mail something (a verification code) to the residency address the user provided, with instructions to access a particular webpage to verify.

Yup too easy.  Lots of services use a system like that (to include WU online and Prosper lending).  It also has less overall cost compared to notorizing a damn electrical bill.  Of course that would require they care.  95%+ marketshare = no real reason for them to improve.  If ever their marketing share fell even 15% to 20% suddenly all these "unpossible" solutions would become very possible.

[miernik]

What they should do is mail something (a verification code) to the residency address the user provided, with instructions to access a particular webpage to verify.

Well, that's what Moneybookers also does for example.

Though it does not prove that the user lives there, but NOTHING can prove that the user lives there. Not even paying bills prove anything - anyway in many places bills are in the name of the building owner, who can own many buildings and not even live in most of them, but rent them out. Then the landlord can verify a plethora of addresses where he does not live, and his tenants can't verify anything.

But the letter with a code proves something which is actually the only reasonably needed thing: that the user can receive mail there, so a letter from the court or lawsuit can be delivered to the user there as valid.

If the user lives there or not is actually irrelevant, because nothing can prove that, besides maybe attaching a GPS device the the users leg with constant monitoring at MtGox headquarters. That would be something MagicalTux would need! LOL! He wants to have up-to-date users location, as the "utility bill" has to be not older then 3 months. Why 3 months? I can "live" (i.e. sleep?) somewhere today, and never appear there again, GPS monitoring of users should be a must "to fight money laundering".

Oh, and there is another thing to ensure with even more certainty that the current users "residence" is known: when the user is in jail, preferably for many years. Then a copy of his jail sentence could be sent to MtGox, and level 2 AML verification will be grated for the period of his jail term. Not longer of course, as then the user will move out! In fact it would be best for MagicalTux's users-tracking requirements, that only jailed users will have verified accounts, all accounts of other users will be frozen, and they will be instructed to commit something that will land them in jail, so they can deliver a notarized copy of the jail sentence with address of the jail. Only then MagicalTux will be sure that none of his users are "money laundering". Anything else is ineffective.

[Mt.Gox Support]

What they should do is mail something (a verification code) to the residency address the user provided, with instructions to access a particular webpage to verify.

We considered this kind of solution in the past and we may have finally find a solution that will be similar to what you proposed. We hope to put this in place soon, but since we have customers all over the world we need to make sure that we will be capable to offer to everyone the same service and make sure it will work just fine.

[Immanual Go]

This is what Google does for Adsense payouts.

[mem]

What they should do is mail something (a verification code) to the residency address the user provided, with instructions to access a particular webpage to verify.

We considered this kind of solution in the past and we may have finally find a solution that will be similar to what you proposed. We hope to put this in place soon, but since we have customers all over the world we need to make sure that we will be capable to offer to everyone the same service and make sure it will work just fine.

Sounds good, mobile phones (sms verification) is another popular method.

keep up the good work mtgox.

[JusticeForYou]

This is the problem with all these crazy AML KYC rules. It's like the governments want you to absolutely identify the customer. Next we will be seeing Fingerprints and DNA samples required. But it still won't be enough. i.e. The movie Gattaca

And these methods do nothing to prevent 'Brokers'. i.e. People acting on others behalves. I would guess MT wouldn't or shouldn't care about that however as long as the Broker is identified.

But it begs to question, What is the purpose of AML KYC rules again?

I guess to catch unimaginative crooks after making businesses spend millions upon millions of dollars adhering to the rules.

Broker -> ... Broker -> MTGOX -> Broker -> ... Broker  and AML KYC becomes useless.

Here is a thought: How about catch the crooks doing what it is they are doing that requires them to launder money rather than blame businesses for not adhering to AML KYC rules as a reason why you can't catch them.

[miernik]

Here is a thought: How about catch the crooks doing what it is they are doing that requires them to launder money rather than blame businesses for not adhering to AML KYC rules as a reason why you can't catch them.

Oh, that will maybe reduce real crime, but well.. it won't give the governments excuse to investigate every detail of general population lives, which is the real reason for AML/KYC stuff, not fighting some real crime. In fact governments are not so much interested in fighting real crime, as eliminating it would make people less dependent of the government. The thing that governments are most interested in, is making an appearance of reducing crime, while not reducing it too much at all. For the governments to be able to continue to expand their oppressive power over general population, a certain level of crime must exist.

Bitcoin is there to help reverse this trend, and for the Bitcoin revolution to make sense, we must refuse to participate in exchanges which bend to government regulations too much, i.e. any more then absolutely required to stay alive.