Topic: [Completed] 0.03 BTC Bounty: Write a general AML/KYC process sticky (Read 6514 times)

In a lot of places it's standard in order to be able to even register or acquire shareholdings in a private company (and it definitely applies for shareholdings over a certain % in public companies).  Many financial institutions also require that any signatories on a business account fully verify their identities in addition to the business itself verifying.

There are many things which can trigger enhanced KYC requirements and ongoing customer due diligence is an actual requirement of AML compliance.  Each organisation has to develop its own framework for these processes, but the penalties for non-compliance are so huge that entities tend to err on the side of caution and try to exceed the required standards (which are often only laid down as broad principles) rather than risk falling short of compliance. 

Added data for Coinbase, Bitfinex, Kraken and LocalBitcoin.

What is KYC ?

Know your customer (KYC) refers to due diligence activities that financial institutions and other regulated companies must perform to ascertain relevant information from their clients for the purpose of doing business with them. The term is also used to refer to the bank regulation which governs these activities. Know Your Customer processes are also employed by companies of all sizes for the purpose of ensuring their proposed agents', consultants' or distributors' anti-bribery compliance. Banks, insurers and export credit agencies are increasingly demanding that customers provide detailed anti-corruption due diligence information, to verify their probity and integrity.


Who has to enforce KYC ?

Know your customer (KYC) falls under the responsability of each financial institution and/or regulated company.

The regulations require these entities to adopt KYC procedures.  It assists them in knowing / understanding the customers and their financial dealings better to monitor their transactions for identification and prevention of suspicious transactions.


KYC Recommendations

KYC controls typically include the following:

- Collection and analysis of basic identity information (referred to in US regulations and practice a "Customer Identification Program" or CIP)
- Name matching against lists of known parties (such as "politically exposed person" or PEP)
- Determination of the customer's risk in terms of propensity to commit money laundering, terrorist finance, or identity theft
- Creation of an expectation of a customer's transactional behavior
- Monitoring of a customer's transactions against their expected behaviour and recorded profile as well as that of the customer's peers

KYC Jurisdiction and Locality

KYC regulations are local, and differ from country to country. Jurisdiction is also, on a coutry to country basis.

To know more about you're specific country, visit: http://kycmap.com


KYC and Bitcoin Exchanges

Stricter KYC policies:

Bitstamp   https://www.bitstamp.net/privacy-policy/
Bitfinex       https://www.bitfinex.com/pages/tos  or refer inquiries to [email protected]
BTCChina   (only since new PBOC guidance, Dec 2013) (link?)
Cavirtex   https://www.cavirtex.com/faq
Coinbase    https://coinbase.com/legal/privacy
Kraken       https://www.kraken.com/legal/verification (their General Counsel, Constance Choi is a well known specialist in the Regulatory and Compliance field)
MtGox   https://bitcointalksearch.org/topic/mtgox-amlkyc-process-explained-86224

Loose or non-existant KYC policies:

BTC-e   (??)
Crypsty   (??)
LocalBitcoin (p2p based, limited KYC?)

---

What is AML?

Standing for "Anti-money Laundering", it is a set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions. In most cases money launderers hide their actions through a series of steps that make it look like money coming from illegal or unethical sources was earned legitimately.

Who has to enforce AML?

In response to mounting concern over money laundering, the Financial Action Task Force on Money Laundering (FATF) was established by the G-7 Summit that was held in Paris in 1989.

The Task Force was given the responsibility of examining money laundering techniques and trends, reviewing the action which had already been taken at a national or international level, and setting out the measures that still needed to be taken to combat money laundering. In April 1990, less than one year after its creation, the FATF issued a report containing a set of Forty Recommendations, which provide a comprehensive plan of action needed to fight against money laundering.

The FATF calls upon all countries to take the necessary steps to bring their national systems for combating money laundering and terrorism financing into compliance with the new FATF Recommendations, and to effectively implement these measures.

Again, as in the case of KYC, financial institutions and/or regulated companies are responsible for the implemention of internal AML policies.

AML Jurisdiction and Locality

AML regulations are also local, and differ from country to country. Some countries choose a top-down approach, inheriting much of their AML policies from the FATF, while others go for a bottom-up approach and then have to reconcile both policies. Extreme countries where such reconciliation is impossible (generally due to Government unwillingness) are excluded from the FATF membership, with the corollary of increased complications to access the international markets and financing.

For a full list of FATF members, visit:         http://en.wikipedia.org/wiki/Financial_Action_Task_Force_on_Money_Laundering

AML and Bitcoin Exchanges

Currently in compliance:

Bitstamp   https://www.bitstamp.net/aml-policy/
Bitfinex      https://www.bitfinex.com/pages/tos or refer inquiries to [email protected]
Cavirtex   https://www.cavirtex.com/why_virtex#proactively_working
Coinbase    https://coinbase.com/legal/privacy
Kraken       https://www.kraken.com/legal/aml (their General Counsel, Constance Choi is a well known specialist in the Regulatory and Compliance field)
MtGox   https://bitcointalksearch.org/topic/mtgox-amlkyc-process-explained-86224

Unknown status:

BTCChina   (unclear since new PBOC guidance, Dec 2013) (are they financial institutions?)
BTC-e   https://btc-e.com/page/1
LocalBitcoin (p2p based, limited or no AML?)

---

WARNING:
Assume that restrictions for any Bitcoin to National Currency exchange may become more restrictive at any time in the future. Many exchanges in the past have restricted currency deposits or withdrawals proactively as BitStamp has, without any explicit order from a government agency to do so at the time. Others like BTCChina have in response to concerns made even the ability to continue to login to their platform contingent on supplying further identifying information. In the past surprise changes to AML/KYC requirements have lead users of exchanges to have their access to deposited funds substantially delayed while complying with new requirements or even lost access to their deposited funds completely if they could not comply with the new requirements. Changing AML/KYC exchange enacted AML/KYS requirements have effected users of all major exchanges that handle both Bitcoin and National currency. People who continue using such exchanges should prepare for the contingency that their exchange of choice will change their AML/KYC requirements in the future.

Maybe this is the wrong thread to bring any of this up, but I don't want people to be distracted by this kind of thread from the real issue of MTGox being unable to meet their obligations to even moderate sized customers, especially when you are trying to gain new customers who will end up completely screwed when the Gox house of cards comes crashing down. 

What is KYC ?

Know your customer (KYC) refers to due diligence activities that financial institutions and other regulated companies must perform to ascertain relevant information from their clients for the purpose of doing business with them. The term is also used to refer to the bank regulation which governs these activities. Know Your Customer processes are also employed by companies of all sizes for the purpose of ensuring their proposed agents', consultants' or distributors' anti-bribery compliance. Banks, insurers and export credit agencies are increasingly demanding that customers provide detailed anti-corruption due diligence information, to verify their probity and integrity.


Who has to enforce KYC ?

Know your customer (KYC) falls under the responsability of each financial institution and/or regulated company.

The regulations require these entities to adopt KYC procedures.  It assists them in knowing / understanding the customers and their financial dealings better to monitor their transactions for identification and prevention of suspicious transactions.


KYC Recommendations

KYC controls typically include the following:

- Collection and analysis of basic identity information (referred to in US regulations and practice a "Customer Identification Program" or CIP)
- Name matching against lists of known parties (such as "politically exposed person" or PEP)
- Determination of the customer's risk in terms of propensity to commit money laundering, terrorist finance, or identity theft
- Creation of an expectation of a customer's transactional behavior
- Monitoring of a customer's transactions against their expected behaviour and recorded profile as well as that of the customer's peers

KYC Jurisdiction and Locality

KYC regulations are local, and differ from country to country. Jurisdiction is also, on a coutry to country basis.

To know more about you're specific country, visit: http://kycmap.com


KYC and Bitcoin Exchanges

Stricter KYC policies:

MtGox      https://bitcointalksearch.org/topic/mtgox-amlkyc-process-explained-86224
Bitstamp   https://www.bitstamp.net/privacy-policy/
Cavirtex   https://www.cavirtex.com/faq
BTCChina   (only since new PBOC guidance, Dec 2013) (link?)

Loose or non-existant KYC policies:

BTC-e      (??)
Crypsty      (??)

---

What is AML?

Standing for "Anti-money Laundering", it is a set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions. In most cases money launderers hide their actions through a series of steps that make it look like money coming from illegal or unethical sources was earned legitimately.

Who has to enforce AML?

In response to mounting concern over money laundering, the Financial Action Task Force on Money Laundering (FATF) was established by the G-7 Summit that was held in Paris in 1989.

The Task Force was given the responsibility of examining money laundering techniques and trends, reviewing the action which had already been taken at a national or international level, and setting out the measures that still needed to be taken to combat money laundering. In April 1990, less than one year after its creation, the FATF issued a report containing a set of Forty Recommendations, which provide a comprehensive plan of action needed to fight against money laundering.

The FATF calls upon all countries to take the necessary steps to bring their national systems for combating money laundering and terrorism financing into compliance with the new FATF Recommendations, and to effectively implement these measures.

Again, as in the case of KYC, financial institutions and/or regulated companies are responsible for the implemention of internal AML policies.

AML Jurisdiction and Locality

AML regulations are also local, and differ from country to country. Some countries choose a top-down approach, inheriting much of their AML policies from the FATF, while others go for a bottom-up approach and then have to reconcile both policies. Extreme countries where such reconciliation is impossible (generally due to Government unwillingness) are excluded from the FATF membership, with the corollary of increased complications to access the international markets and financing.

For a full list of FATF members, visit:         http://en.wikipedia.org/wiki/Financial_Action_Task_Force_on_Money_Laundering

AML and Bitcoin Exchanges

Currently in compliance:

MtGox      https://bitcointalksearch.org/topic/mtgox-amlkyc-process-explained-86224
Bitstamp   https://www.bitstamp.net/aml-policy/
Cavirtex   https://www.cavirtex.com/why_virtex#proactively_working

Unknown status:

BTCChina   (unclear since new PBOC guidance, Dec 2013) (are they financial institutions?)
BTC-e      https://btc-e.com/page/1

---

WARNING:
Assume that restrictions for any Bitcoin to National Currency exchange may become more restrictive at any time in the future. Many exchanges in the past have restricted currency deposits or withdrawals proactively as BitStamp has, without any explicit order from a government agency to do so at the time. Others like BTCChina have in response to concerns made even the ability to continue to login to their platform contingent on supplying further identifying information. In the past surprise changes to AML/KYC requirements have lead users of exchanges to have their access to deposited funds substantially delayed while complying with new requirements or even lost access to their deposited funds completely if they could not comply with the new requirements. Changing AML/KYC exchange enacted AML/KYS requirements have effected users of all major exchanges that handle both Bitcoin and National currency. People who continue using such exchanges should prepare for the contingency that their exchange of choice will change their AML/KYC requirements in the future.

* FATF requirements in bringing within its scope all persons dealing in goods or providing services for cash payment of €7,500 or more.
* FinCEN They would have new bookkeeping requirements and mandatory reporting for transactions of more than $10,000.
* The Financial Crimes Enforcement Network ( FinCEN ) has released guidelines for cryptocurrencies that basically say you just need to follow their rules therefore exchanges are considered money transmitters and must follow AML and KYC rules.
* BitCoin as a payment system and value storage system is not compliant with Anti-Money Laundering (AML) regulations, Know Your Customer (KYC) regulations.
* About the transfers, The concession is in the fact that both the sender and receiver of funds have a payment card that is issued by a bank.  Thus a bank would have already performed the needed KYC and AML on both parties before issuing the payment card.  The record of the financial event is at both sides of the transaction written to the statements of both payment cards.
* The KYC and AML checks (wire-transfers in/out) for bitcoin exchanges also take too much time.
* There is simple KYC that allows certain credit limits and payment amount before full KYC needs to be carried out, usually by several forms of ID and reference.
* Certain countries, the UK being one of them, are pretty strict about KYC whilst some of the newer entrants to the EU are not so strict, but often, if they are using their own Acquirer then KYC will already have taken place.

Beyond what I wrote I don't know if there is much to be written which won't be different in the next one to twelve months. Major English language exchanges want generally a Driver's license/ID Card Scan plus a utility bill, BTC China wants and national ID number or passport number, RoboCoin's atm wants a god damned palmprint. Thankfully I was in early enough to take the easy part.

Absolutely, for sure! Post an address and I'll send you BTC0.03.

For everyone else, to clarify, I am looking for something to be made that is not specific to MtGox. You can and should link to any existing information (like the MtGox thread, for example), but I want the actual content to be pretty general. Also, since I'll be paying for Atruk's contribution, I would now like that or something like that to be mentioned.

This is a piece of text that should be included in any AML/KYC sticky near the top. It doesn't address details of the problem, but addresses ongoing risks presented by AML/KYC efforts.

Obviously, that doesn't count. You have to at least put some of your own effort into it.

Come on, guys! ticoti posted some useful information. Improve the post, and you'll BOTH get 0.03 bitcoins!

Oh, by the way, I'm raising the bounty to BTC0.03 

Assume that restrictions for any Bitcoin to National Currency exchange may become more restrictive at any time in the future. Many exchanges in the past have restricted currency deposits or withdrawals proactively as BitStamp has, without any explicit order from a government agency to do so at the time. Others like BTCChina have in response to concerns made even the ability to continue to login to their platform contingent on supplying further identifying information. In the past surprise changes to AML/KYC requirements have lead users of exchanges to have their access to deposited funds substantially delayed while complying with new requirements or even lost access to their deposited funds completely if they could not comply with the new requirements. Changing AML/KYC exchange enacted AML/KYS requirements have effected users of all major exchanges that handle both Bitcoin and National currency. People who continue using such exchanges should prepare for the contingency that their exchange of choice will change their AML/KYC requirements in the future.

I'll sticky it for now, but I'd much rather that there be a more general AML sticky that discusses the issue as well as this one does and then links to company-specific AML information, such as this thread.