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Author Topic: Bitcoin exchanges should use third party AML/KYC companies.  (Read 1207 times)
Bitcoin Oz
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June 09, 2012, 08:31:50 AM
 #1

http://www.greenid.com.au/  is one such company that specialises in this. I am sure there are others.

I would be much more comfortable for transparency reasons using a third party to verify my private information than allowing the same company that does the exchanging to also verify my documents because they can simply claim your documents are fake. There is a perverse incentive to do so at the current moment.

Might also be a business opportunity there to start such a  thing  Smiley


Here is a list of other companies throughout the world doing the same things.

Global Data Academy
http://www.globaldatacompany.com/data-coverage

Australia Post
http://auspost.com.au/personal/id-checks-and-verification.html


Jumio
http://jumio.com/products/netverify/online-id-verification/

Integrity/Aristotle
http://integrity.aristotle.com/

Equifax (UK)
http://www.equifax.co.uk/business_solutions/services/id_verification/index.html

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Bitcoin Oz
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June 09, 2012, 09:03:11 AM
 #2

I also dont wish to send my ID to a bitcoin site that is literally a honeypot for hackers. I can imagine the fun they would have with identity theft etc.

Kazimir
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June 09, 2012, 09:11:32 AM
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Just use an exchange that doesn't require to send your ID and stuff.
Personally I use intersango.com (they only require an email address) and I'm sure there are more.

In theory, there's no difference between theory and practice. In practice, there is.
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June 09, 2012, 09:30:44 AM
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I have been thinking of going slightly further, using "market makers" so that all actual cashing-in and cashing-out takes place at third party businesses. Basically those third parties should be the only customers I need to know, all the activity on my markets would basically just be various pseudonyms of theirs with only they needing to know which of "their people" correspond to which deposit or withdrawal they perform on behalf of "their people".

Also any histories anyone might like to keep would also be up to them, since the Open Transactions server uses "triple signed reciepts" instead of "transaction histories" thus is designed fundamentally from the get-go to track balances, not histories of how the balances came to have the values they at some moment in time happen to have. The whole point is that everyone agrees, and crypto-signs the fact that they agree, what the balance of an account is and once that agreement is reached and signed it is simply a fact, with any speculation about which of how many possible pasts such a present could have emerged from being pointless speculation.

Basically people would buy tokens from third parties and sell them to third parties, just as some people already do with World of Warcraft gold and items or EVE Online ISKs or whatever, all such purchases and sales being totally outside of the servers that actually keep track of what gold or items or ISKs or whatever various characters in the games actually have in their possession at any given moment.

(Or like e-gold was purchased from third party "market makers" and sold back to such "market makers" instead of the users buying directly from or selling directly back to the e-gold server/system itself.... Which didn't stop e-gold being shut down...)

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June 09, 2012, 10:28:44 AM
 #5

I have been thinking of going slightly further, using "market makers" so that all actual cashing-in and cashing-out takes place at third party businesses. Basically those third parties should be the only customers I need to know, all the activity on my markets would basically just be various pseudonyms of theirs with only they needing to know which of "their people" correspond to which deposit or withdrawal they perform on behalf of "their people".

Also any histories anyone might like to keep would also be up to them, since the Open Transactions server uses "triple signed reciepts" instead of "transaction histories" thus is designed fundamentally from the get-go to track balances, not histories of how the balances came to have the values they at some moment in time happen to have. The whole point is that everyone agrees, and crypto-signs the fact that they agree, what the balance of an account is and once that agreement is reached and signed it is simply a fact, with any speculation about which of how many possible pasts such a present could have emerged from being pointless speculation.

Basically people would buy tokens from third parties and sell them to third parties, just as some people already do with World of Warcraft gold and items or EVE Online ISKs or whatever, all such purchases and sales being totally outside of the servers that actually keep track of what gold or items or ISKs or whatever various characters in the games actually have in their possession at any given moment.

(Or like e-gold was purchased from third party "market makers" and sold back to such "market makers" instead of the users buying directly from or selling directly back to the e-gold server/system itself.... Which didn't stop e-gold being shut down...)

-MarkM-


Interesting. So have a "legitimate" account holder fully AML compliant at mt gox and just funnel the transactions through them ?

Theres the small matter of "explaining" where your coins / cash comes from  Cheesy

Thats similar to using "cutouts" where instead of depositing to an exchange directly one would go through an agent who then performs the transaction on their behalf....


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June 09, 2012, 10:34:00 AM
 #6

Imagine an exchange that doesnt accept deposits or withdrawals directly from the public but instead uses "agents" to do it and the exchange merely organises the agents. A customer could deposit with agents who then notify the exchange, which doesnt actually handle any money itself , just takes  a small fee from agents  Grin

Its basically an organised form of hawala.

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June 09, 2012, 10:57:20 AM
 #7

http://www.greenid.com.au/  is one such company that specialises in this. I am sure there are others.

I would be much more comfortable for transparency reasons using a third party to verify my private information than allowing the same company that does the exchanging to also verify my documents because they can simply claim your documents are fake. There is a perverse incentive to do so at the current moment.

Might also be a business opportunity there to start such a  thing  Smiley


Their services seem aimed at initial identification rather than ongoing customer due diligence, which is probably one of the biggest burdens reporting entities providing designated services face.  

For what it's worth, Australia Post offers in person 100 point ID checks, AML checks and customised ID checks in its own right.  They verify that the documents have been sighted, record the details and send the completed form to the organisation requesting the ID check.  

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Imagine an exchange that doesnt accept deposits or withdrawals directly from the public but instead uses "agents" to do it and the exchange merely organises the agents. A customer could deposit with agents who then notify the exchange, which doesnt actually handle any money itself , just takes  a small fee from agents 

Its basically an organised form of hawala.

Hawala is already subject to AML/CTF requirements.  Pretty much any system which seeks to hide the origin or destination of funds is going to run into problems with the Act on multiple grounds.

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, 11:27:30 AM
 #8

I am not trying to hide the origin or destination of funds. The origin of funds used to buy units of tokenX is customers of the or a tokenX "market maker". The destination of funds used to buy units of tokenX is whoever or whatever that market-maker chooses to spend the funds on, which likely will from time to time include buying units of tokenX from customers, probably at a price per unit less than that for which they sell them to customers.

Similarly for funds used to buy units of tokenY, tokenZ and so on.

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June 09, 2012, 11:47:53 AM
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Is there a similar thing to http://www.greenid.com.au/ but not only for Australia? For example, Mt Gox probably wouldn't use these guys cause they have clients from all over the globe, and being able to hand off just your Australian customers may not make it worthwhile when you have a process in place anyhow for the other places.

I'm interested in this sort of thing, but would like it to be a bit broader than Australia. If you have any other examples of companies doing similar work to greenid, it'd be great if you could post them in the OP so that there's some kind of central resource to find 'outsourced AML providers'... that would be handy for many upcoming bitcoin businesses to have access to.

Thanks for posting this, it wasn't something I had previously considered.
repentance
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June 09, 2012, 12:12:52 PM
 #10

Is there a similar thing to http://www.greenid.com.au/ but not only for Australia? For example, Mt Gox probably wouldn't use these guys cause they have clients from all over the globe, and being able to hand off just your Australian customers may not make it worthwhile when you have a process in place anyhow for the other places.

I'm interested in this sort of thing, but would like it to be a bit broader than Australia. If you have any other examples of companies doing similar work to greenid, it'd be great if you could post them in the OP so that there's some kind of central resource to find 'outsourced AML providers'... that would be handy for many upcoming bitcoin businesses to have access to.

Thanks for posting this, it wasn't something I had previously considered.

http://www.globaldatacompany.com/data-coverage

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
Bitcoin Oz
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June 10, 2012, 01:08:09 AM
 #11

Is there a similar thing to http://www.greenid.com.au/ but not only for Australia? For example, Mt Gox probably wouldn't use these guys cause they have clients from all over the globe, and being able to hand off just your Australian customers may not make it worthwhile when you have a process in place anyhow for the other places.

I'm interested in this sort of thing, but would like it to be a bit broader than Australia. If you have any other examples of companies doing similar work to greenid, it'd be great if you could post them in the OP so that there's some kind of central resource to find 'outsourced AML providers'... that would be handy for many upcoming bitcoin businesses to have access to.

Thanks for posting this, it wasn't something I had previously considered.

http://www.globaldatacompany.com/data-coverage

It seems to be a growing industry with all the requirements from governments for AML documentation. As someone posted somewhere else Australia Post also does AML and you can just give a form to mt gox that verifies you have done the process.

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