Re: [bitcoin-dev] BIPS proposal for implementing AML-KYC in bitcoin

From: Ahmed Zsales <ahmedzsales18@gmail•com>
To: prabhat <prabhatkr@gmail•com>,
	 Bitcoin Dev <bitcoin-dev@lists•linuxfoundation.org>
Subject: Re: [bitcoin-dev] BIPS proposal for implementing AML-KYC in bitcoin
Date: Thu, 27 Aug 2015 10:04:33 +0100	[thread overview]
Message-ID: <CADr=VrT9BBR_CGhr0ODvggtJx7tXW=uMky+S9UXgrXS3CmHHyw@mail.gmail.com> (raw)
In-Reply-To: <CALoZ_LG7POrwNqtG9prvG_1T3+OcWNo9cKbiwHDu9xP85zqOEA@mail.gmail.com>

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I would prefer not to download an attachment.

Generally and without having the benefit of reading your document, AML and
or KYC requirements are treated on a jurisdiction by jurisdiction basis.
You would probably need to factor obtaining a universal agreement between
all of the governments and regional enforcement bodies of the world on the
nature and scope of an acceptable set of policies before attempting to
attach rules to the protocol. Clearly, when one country unilaterally places
politicians of another country on banned lists and vice versa, for example,
would create some problems with implementation and automating checks
against banned lists produced by each country.

While you could apply a 'home rule' approach, you would be pushing
regulatory controls down to individuals transacting between each other
without having to go through any regulated intermediaries. This means you
have no way to enforce KYC or verify that the details are correct unless
you create a system of third party checkers in each country who would
enable transactions to proceed. To overcome all of this you would probably
need some identity verification system in place first and to add extra fees
into the network to pay for the maintenance of the system.

As has already been pointed out, the above would lead to individual coins
being tainted with previous ownership details creating the possibility for
blacklists rendering some coins worthless and creating the possibility of
these coins being passed on to unsuspecting users. All this goes against
the spirit of monetary systems, so you are back to regulating end points as
and when users come into contact with regulated entities.

Lastly, it might be worth knowing that criminal liability can be placed on
individuals responsible for implementing AML and KYC procedures and
policies that do not work or allow criminals to circumvent the systems of
controls.

On Thu, Aug 27, 2015 at 9:10 AM, prabhat via bitcoin-dev <
bitcoin-dev@lists•linuxfoundation.org> wrote:

> Hi,
>
> I am proposing to create a AML-KYC module to control the network and also
> qualify use cases in OFAC compliant way.
> Here is the attached doc.
>
> Please provide your feedback and suggestions.
>
> Best,
> Prabhat Kumar Singh
>
> _______________________________________________
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> bitcoin-dev@lists•linuxfoundation.org
> https://lists.linuxfoundation.org/mailman/listinfo/bitcoin-dev
>
>

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