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Author Topic: Mt.Gox AML/KYC Process Explained  (Read 57101 times)
Liberty Payout
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June 08, 2012, 03:15:56 PM
 #21

+1 for taking the time to post this.
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June 08, 2012, 03:43:31 PM
 #22

Hi Everyone,

My name is Dylan, and I work in Mt.Gox's Compliance Division.

Okay, three questions:

1) Why not move MtGox somewhere with no or lax AML laws? Isn't Japan expensive anyway?
2) While I understand Korean/Arabic/Hebrew may be difficult, learning to read Cyrillic script is by no means an impossible task, took me a week after studying for... 5 minutes a day. Unless you don't mind covering translation costs which you should be doing I don't see how that should be a problem for you.
3) Proof of residence - what about those who do not have a fixed place of residence? I know this is probably not very common but I have a friend without an ''official'' place of residence (meaning most govt. officials here think he is homeless) who is interested in Bitcoin, what would he have to submit to comply with your rules?
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June 08, 2012, 05:26:49 PM
 #23

Hi Goat,

For point 1 - We don't give, sell, offer or in any other way make available our documents to law enforcement agencies unless we are legally compelled to do so  Wink... With the following exception:

For point 2 - We only report customers to the police relevant financial regulator when we have actual proof that they are actively involved in severe financial crimes such as money laundering or terrorist financing as we are legally obliged to do so. With regards to your particular case, I'll have to ask MagicalTux and get back to you. Would you prefer a public answer or for me to PM you?

Edit - oops, edited for clarity.

So basically this:

https://mtgox.com/terms_of_service

Quote
In the case of fraud, Mt. Gox will report all necessary information, including names, addresses and all other requested information, to the relevant authorities dealing with fraud and breaches of the law. Members recognize that their account may be frozen at any time at the request of any competent authority investigating a fraud or any other illegal activity.

And well I'm on that page:

Quote
Members also agree that Mt. Gox may, in its sole discretion by giving notice, terminate Members' access to the Site and their Account, including without limitation: limit, suspend or terminate the service and Members' Accounts, prohibit access to the Site and its content, services and tools, delay or remove hosted content, and take technical and legal steps to keep Members off the Site if we think that they are creating problems or possible legal liabilities, infringing the intellectual property rights of third parties, or acting inconsistently with the letter or spirit of these Terms. Additionally, we may, in appropriate circumstances and at our discretion, suspend or terminate Accounts of Members for any reason, including without limitation: (1) attempts to gain unauthorized access to the Site or another Member’s account or providing assistance to others' attempting to do so, (2) overcoming software security features limiting use of or protecting any content, (3) usage of the Platform to perform illegal activities such as money laundering, terrorism financing or other criminal activities, (4) violations of these Terms, (5) failure to pay or fraudulent payment for Transactions, (6) unexpected operational difficulties, or (7) requests by law enforcement or other government agencies.

Therefore, if I read this correctly, if the long-arm of some US governmental agency is in the process of completing a dossier on me and asked Mt. Gox to close my account as well as provide everything in your database related to me, they would comply?

~Bruno~
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June 08, 2012, 05:37:55 PM
 #24

Link to main thread where some questions are being answered.

https://bitcointalk.org/index.php?topic=86224.0

This is so fucked up! I just now got to this post at the other thread.

~Bruno~


It is difficult for me to keep track of both threads as well Sad

(at least they limited it to only 2!)

I have an idea. Why don't you and I start a third one, then hopefully the Goons over at SA can start a forth.

If they can't even use a forum correctly, how the hell are they able to keep track of other people's money? I now wouldn't be surprise to learn that both bathrooms at their office--men and women--have urinals installed in each.

~Bruno~
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June 08, 2012, 06:54:04 PM
 #25

Two things I'd like address:


1.) if a person transfers fiat from Dwolla or other entity to you and only then becomes aware of your AML/KYC requirements, you NEED an avenue available to reverse the funds or return the funds to the origin if they do not wish to comply.

The fact that my funds were frozen until I complied felt like being bullied...big time.  By holding my funds and demanding my driver's license or passport, you basically stole my funds and refused to give them back since I had no avenue of reversal or refund.

2.) You stated "While it would be a great income stream for us, sadly we are not legally allowed to sell your personal information."....

SADLY?  WTH???

Should I read "sadly" and "it would be a great income stream" to mean that the second you find a legal loophole, out the door goes my personal information? These aren't just email addresses and names and physical addresses. These are SS#s, DL #s, etc.

That was a pretty unnerving thing to hear.
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June 08, 2012, 06:58:49 PM
 #26

SADLY?  WTH???

Should I read "sadly" and "it would be a great income stream" to mean that the second you find a legal loophole, out the door goes my personal information? These aren't just email addresses and names and physical addresses. These are SS#s, DL #s, etc.

That was a pretty unnerving thing to hear.
[/quote
I think it was sarcasm.

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June 08, 2012, 07:00:07 PM
 #27

It is kind of sad to be forced to the expense of insisting on having the information, and of checking it, and of having to store it, securely at that, and after all that expense not even be permitted to sell it so it would pay for itself.

Its not as if the powers that be pay for all that work they insist be done for them.

Maybe said powers should simply provide a signed-statement-of-identity site where Gox et all can just paste a signed message and get back a yes or no as to whether it is signed by person it claims to be from, without the Gox et all even knowing who it is that it is claiming to be, only that whoever it is, it is?

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June 08, 2012, 08:29:45 PM
 #28


A client of mine gave me cash for a load of barn wood the other day. I now hold in my hands actual proof that he deals in cocaine, therefore I'm obligated to turn over the cash to my bank so that they can inform the proper authorities about this drug dealer. With that, I ask: At what point do you stop acting as an exchange and become policemen?

~Bruno~


You're not bound by AML/KYC requirements unless you're a reporting entity providing a financial service as defined by the relevant legislation in your country or a non-financial service to which those requirements apply (lawyers, accountants and jewellers have recently become "reporting entities providing a non-financial service" in Australia).

While you don't have any AML/KYC obligations, your bank does and they could actually freeze your account pending verification of your identity and proof of the source of funds if they have reason to believe the transaction is "suspicious".

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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June 08, 2012, 09:03:53 PM
 #29


@The Joint, I'm aware that there have been a lot of complaints recently about how customer service has been handled by us. I'm only authorised to talk about the activities of my division at the moment (AML/KYC), but I'll see if I can get an answer for you on each of your points. I should warn you ahead of time that I probably won't be allowed to discuss specific staff salaries for obvious reasons, but I'll see.

Sorry that I can't give better answers than this right now, but please be patient and I'll see what I can do.


Thanks, I appreciate it.

By the way, the reason I am asking about wage/salary in addition to asking about the number of employed service representatives is so that I can get some idea of whether or not Mt. Gox can afford to hire additional personnel.  I would be more interested in the average salary/wage paid to its customer service reps than specific salaries/wages.

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June 09, 2012, 12:48:23 AM
 #30

Well, it seems I've found Mt. Gox's server and, I believe, Dylan (standing next to server). No wonder Bruce didn't show any video of the servers during his stay in Japan last year, for the server was a lot smaller back in the day.

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June 09, 2012, 12:53:19 AM
 #31

LOL


That server couldn't even run a tenth of mtgox's trading engine load.

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June 09, 2012, 01:04:30 AM
 #32

Quote
By the way, the reason I am asking about wage/salary in addition to asking about the number of employed service representatives is so that I can get some idea of whether or not Mt. Gox can afford to hire additional personnel.  I would be more interested in the average salary/wage paid to its customer service reps than specific salaries/wages.

They did publish their financials in January.  It's a bit of a pain to work out because they list some items in Yen, some in BTC and some in USD but they listed their monthly operational costs as JYen 5,000,000 (USD 62,900).  They listed their monthly server costs including back ups as USD 5,000.

https://mtgox.com/press_release_20120201.html

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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June 09, 2012, 01:28:34 PM
 #33

If you think Mt Gox is bad wait till you use kalyhost  Cheesy

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June 11, 2012, 02:03:31 AM
 #34

Hi All,

Unfortunately I can't reply to everyone individually due to the volume of responses this thread.

First to cover some general points:

I apologise for creating two threads for the same issue, but was attempting to make this information as widely available as possible. Most new users will look at the Bitcoin Discussion page before they come here, and AML information is more useful for new users. I will of course reply to questions in this thread here, and questions in that thread there.

I apologise for perhaps taking too light-hearted an approach to a topic which for some users is a very sensitive issue. To reiterate, we absolutely don't sell personal information and would not do so even if we were legally able to.

To answer some more specific points:

@Goat, according to MagicalTux, your account was banned because there were many indicators on your account which pointed to money laundering. I'm very sorry that I inadvertently implied that you were linked to terrorism, I was speaking very generally at that point. Furthermore, as you know we've now cleared up the misunderstanding with you and have since re-enabled your account. To give more details, we noticed that fiat currency withdrawals were going to accounts with different names multiple countries. It also initially appeared that stolen identities were being given in the AML process, as multiple individuals from various countries' IDs had been submitted. As such, we were under the mistaken impression that criminal activity was going on under your account.

We are very sorry for the inconvenience, and the mistake on our part. To make a definitive statement, we are now aware that you are not carrying out any criminal activity using your Mt.Gox account. For those wanting more information, this has also been answered elsewhere: https://bitcointalk.org/index.php?topic=78244.0

@The Joint, I've been given authorisation to answer some of your questions as follows:

1)  What is the exact number of customer service representatives employed by Mt. Gox? 

At present, 3. However, we are about to finalise a contract with an external support provider which will increase this number to 4-5.

2)  What are the exact minimum and exact maximum number of customer service representatives working and available for support at any given time? 

At present, all 3 staff work during Japanese business hours, Monday to Friday. This will soon change to include 24x7 support, including live chat and phone support.

4)  How many hours does a typical customer service representative employed by Mt. Gox work each week?

Staff work roughly 40 hours a week.

5)  In what manner does Mt. Gox hold itself accountable for relaying false information to its customers?  I'm thinking of Inaba's recent- and ongoing thread as I type this question.  It appears that it has been a theme for Mt. Gox to respond to such accusations indirectly, for example by citing AML/KYC regulations, and not directly by responding to the specific accusation.

Unfortunately, like any company Mt.Gox is prone to the occasional mistake. When we do we always try to correct it as quickly as possible, as happened in Goat's case. However, we are legally obliged to not discuss the specifics of ongoing AML investigations which sometimes forces us to be vague and indirect. We are always very sorry in these cases for the manner in which we must communicate.

6)  Is Mt. Gox willing to implement a 'guarantee' policy related to statements made to its customers (e.g. a time-frame wherein Mt. Gox has indicated that it will release frozen funds, wherein a transfer of funds will take place, etc.)?

We can't do this, as much as we'd like to (if I'm understanding your question correctly.) This is mainly because often, the funds won't be frozen by us but by one of our banking partners. Once this happens we have no control over the investigation, we just have to support it as much as we are able or risk having our entire account frozen. If we were to make a statement along the lines of "if your funds have been marked for AML investigation, they will be returned to you regardless of the outcome after XX days" it would be both unenforceable and untrue, as in cases where money laundering can be proven the funds are transferred to the relevant financial regulator pending the outcome of a law enforcement investigation.

Tainted coins are an issue completely separate to AML, and as such I can't offer any information on this point. I believe MagicalTux has explained the tainted coin policy elsewhere on the forum recently, for those who are interested.

Bruno, with regards to our terms of service quoted, we are legally obliged to do so. Even though we are based in Japan, we have American customers and as such, under U.S. law, are forced to comply with American authorities. All U.S. users should be aware of this fact, but please note that we would not perform any actions until receiving the relevant court order.

Regarding releasing funds when an account is held for AML processing, we cannot do this for the reason noted under point 6 above in general. In cases where an internal AML investigation is underway (in other words, an investigation being performed by us rather than an external banking institution) then we do have some leeway on this issue depending on the legal circumstances of the hold.

I hope this answers most of the questions which have been asked, I'll now head over to the other thread and answer any outstanding ones there.
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June 11, 2012, 04:08:51 AM
 #35

I don't know what is happening with your verification system, but I was denied because you did not acknowledge a bill I uploaded. I uploaded another bill so I hope it gets approved soon. I have been doing business with mtgox regularly for over a year. All I want to do is make Dwolla deposits. Fortunately, Bitinstant is there, though it costs a lot in fees.

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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June 13, 2012, 01:37:47 PM
 #36

I'm with cbeast, I've been doing business with Mt Gox for a long time, and all they're doing is treating me like shit over this AML process.

I've provided everything they've asked for, and now they're asking me for a LOCAL GOVERNMENT ISSUED, NOTARIZED PROOF OF RESIDENCY.

I live at an apartment complex, and let's just say that the office staff are less than competent.

I can't get them more than I've already given (which is photocopies of Driver's License and a signed Proof of Residency from my apartment complex, as well as my last invoice) but yet they are still denying my application.

When I requested my money back so that I could close my account and just go do business elsewhere, they denied that also, and said "we would really appreciate it if you continued the process."

Whatever, i'm so annoyed by them.
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June 14, 2012, 02:29:02 AM
 #37

People have to understand one thing, we, and this will apply to any other Exchange at some point, have to follow government and banks rules. Do we like these rules? Not always. Do we enjoy enforcing them? Hell no! Do we have a choice? Not at ALL!

Unless all of you start mining BTC, uses these Bitcoins to pay stuff in Bitcoins and never ever cash out or buy Bitcoins, we will have to follow these rules, coz at ANY GIVEN TIME, if we are not capable to give the proper documentation that a Bank for example need for a deposit or a withdraw they will use this opportunity to shut us down from using their service again. And I am not talking about huge amounts there but if they want to be a pain in the XXX they will and this even for $10.

Banks rules are different from one Bank to another and they totally control us since we NEED them to help you to cash in or out. They are totally closed and will never give you any reasons or details on why a wire is blocked or why they start investigating a certain transfer. And with their Terror list, if you are unfortunate enough to bear the same name as a person in this watch list, hell will fall over us.

At the beginning they did not really care about us, so we could do pretty much everything we wanted, opening an account there, offering such service, but since :
1) We grew and started to handle a lot of money
2) The popularity of Bitcoin and the Risk for them

Banks are scrutinizing our every move.

Now sure you can go to another exchange and we totally understand that, but if tomorrow XYZ Exchange start handling as much as we are handling, they will face the same problems as we do and they will become as "unpopular" as we are.

So at this point there are not many solutions. And our goal is to make sure that we are as CLEAN as possible in the eyes of these people in order to continue to help Bitcoin to move forward. Sometimes we are rather "aggressive" on these aspects and ask more than what an average bank may ask or need clearer documents, but this is in NO WAY to bother you but just to tell Governments and Banks that we are doing things by the books and that we are in no way criminals!

We know that there are many things that need to improve, and we are working on it, unfortunately and since we are working at an international level there are many things that need to be done at the same time which is slowing us down. Things take time and time is something that with Internet and IT Success have radically change in the eyes of many people where things are moving at Light speed, but when it comes to Banks and Government, time is set on another scale that frustrate all of us. The best example I have for you, and I cannot go too much in details, is when we explain to a Government entity what is Bitcoin and what would be the perfect set of rules that we must follow to make sure that we can continue our business in peace. After our lawyer gave them all documentation, met them at several occasions, we asked, when can you give us an answer? They replied : We cannot commit to any time on this matter and it will take as much time as needed to get back to you...

So yes we understand your frustration, yes we are working on improving this Process, Yes we have some solution in mind to help you, but remember that we do not do that to bother you, but we do that in order to protect everyone's assets here and make sure that the service is running smoothly. And more Bitcoin will become popular more things will get complicated. After all if any Government or Banks does not need to make Bitcoin illegal to stop it, they can easily do it by forcing Exchange out of the equation and making impossible for people to cash in or cash out.

PS Sorry for this long speech and for the many mistakes it may contain, I wrote this on my way to the office.


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June 14, 2012, 03:00:22 AM
 #38

I have never cashed Bitcoins out for fiat, but now that I can't it makes me wary. I withdrew my Dwolla cash since I cannot deposit it at MtGox. I get credit card applications for nothing more than a credit check. Why is this becoming such a hassle? I hope this gets cleared up soon.

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June 14, 2012, 03:39:42 AM
 #39

I have never cashed Bitcoins out for fiat, but now that I can't it makes me wary. I withdrew my Dwolla cash since I cannot deposit it at MtGox. I get credit card applications for nothing more than a credit check. Why is this becoming such a hassle? I hope this gets cleared up soon.

In an ideal world we would love to kill all these intermediaries (Banks and equivalent) that are in fact making things more complicated and more expensive... But until then we do not have much choice.

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June 14, 2012, 04:42:57 AM
 #40

I have never cashed Bitcoins out for fiat, but now that I can't it makes me wary. I withdrew my Dwolla cash since I cannot deposit it at MtGox. I get credit card applications for nothing more than a credit check. Why is this becoming such a hassle? I hope this gets cleared up soon.

In an ideal world we would love to kill all these intermediaries (Banks and equivalent) that are in fact making things more complicated and more expensive... But until then we do not have much choice.

Quote
Please note that even if you are rejected the first time around, there is nothing wrong with this - we will keep working with you until we are able to get you verified.

I uploaded more, but received no acknowledgement. Do I need to open a ticket?

Any significantly advanced cryptocurrency is indistinguishable from Ponzi Tulips.
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