The Bitcoin Industry is expanding, both in size and strength. Outside investors, enthusiasts, and vendors have joined the movement, and education surrounding the technology has expanded understanding of the real potential for digital currencies. It was great to meet many of the new leaders and prominent voices at this year’s Inside Bitcoins Conference (you can read our twitter timeline here). It was obvious the hype has piqued interest from all areas, including financial regulators who are now catching up, and more informed discussions are yielding wider acceptance in the banking and payments industry.
As the bridge point between digital currencies and traditional methods of payment, it’s unsurprising to see the exchanges emerge as the most active, central hub of the industry (a fact also corroborated by the $25 million funding of Coinbase, and early funding of Circle). Acceptance has increased, and the exchanges have been flooded with a new wave of businesses, enthusiasts, and speculators interested in joining the industry. While it’s exciting to watch the expansion of these exchanges, we still see many struggling to understand and meet the regulations imposed by FinCEN. Some have embraced the requirements, developing in-house AML programs, or are working with companies like ours to develop and operationalize programs with Know Your Customer (KYC) and transaction monitoring technology. Meanwhile, many other exchanges in development- domestically and abroad- are now instituting AML programs as a required step to establish the banking relationships they need to operate.
KYC, or “Know Your Customer,” refers to the due diligence financial institutions are required to perform on their customers as an aspect of doing business. In order to comply with federal regulations surrounding financial fraud, money laundering, identity theft, and terror financing, Bitcoin companies are required to verify their customers by instituting policies on customer acceptance and transactions.
There are few companies currently offering full Know Your Customer capabilities. Most of these rely on databases that are either limited to a geographic location (e.g. US, UK, and few others), or to specific demographics (e.g. mortgage owners, electoral rollups, etc). This leaves a large demographic of foreign nationals, under-banked customers, and users with no public record outside the area of coverage.
The complexities of including these users require addressing Know Your Customer for all demographics- solutions that can connect with multiple data providers, and combine technologies that enable alternative identity verification mechanisms like social network analysis, two factor authentication, and out-of-band authentication. Our solution effectively integrates all within one platform for identity verification.
Furthermore, FinCen also requires Bitcoin exchanges to perform transaction monitoring. Unlike any other KYC provider, our platform correlates all transaction data within the exchanges to KYC data, both as part of the analysis user interface and as part of the analytics that alert on suspicious activity. This greatly benefits AML analysts and investigators by expediting their analysis and reporting process.
In doing so, we’ve begun to demonstrate the value of an integrated solution as a whole, and the increasing effectiveness of compounding additional sources. Though chargebacks and anti-fraud are less of an issue for businesses inside the Bitcoin world, our integrated solution provides the ability to associate funding activity with information from detailed accounts, and cashing-out activities of users. The applications for this outside of Bitcoin- in tracking card theft used to fund accounts, or facilitating Money Laundering, address real issues in-line with regulatory compliance.
In all, it’s exciting to provide the technology required to help the industry move forward, and contribute to the expansion shown by an 800+ attendance at the Inside Bitcoins conference. Seeing the new faces, businesses, and technology driving the industry remains our motivation for creating the most effective and multi-layered solution available. We’re proud to be part of that advancement, and to be the only provider currently offering a full AML program including Know Your Customer that addresses international challenges, transaction monitoring, and anti-fraud leveraging data across multiple exchanges in our network.
We’re IdentityMind, and that’s Superior AML.