KYC Misconception

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Igorkrnic
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KYC Misconception

Post by Igorkrnic » Sat Sep 02, 2017 4:21 pm

As we might know, Onecoin is the only cryptocurrency that actually implements KYC inside the blockchain itself, while other decentralized cryptocurrencies comply to KYC only at the exchange level for fiat deposit option. Crypto - crypto is anonymous and can not be traced by the authorities. Onecoin will make this revolutionary once it goes public.

However, you can see many haters and critiques discrediting Onecoin KYC procedure. The reason for that is because they have obtained onelife logins to various victims to their scam anti Onecoin propaganda and those Onecoin users did not complete KYC procedure so haters were able to try some operations with Non-KYC-Approved Onelife accounts.

In one his speeches, CEO Pierre Arens stated that all transactions inside the Onecoin blockchain are KYC-verified and since haters were able to buy coupon with non-kyc-approved accounts they state that KYC does not work at all.

But they seem to be confused by terms kyc-verified and "required status" kyc-approved that is controlled by the company.

So, all the transactions inside the blockchain are KYC Verified, thing is that not all transactions require your account to be KYC-Approved presently.

Let me explain how the company handles KYC. They did not invent it actually, they are just implementing it full scale.

KYC and eKYC is just a part of CDD (Customer Due Diligence) process and laws stipulate that institutions must:
- establish customer identity,
- understand the nature of the customer’s activities (primary goal is to satisfy that the source of the customer’s funds is legitimate,
- assess money laundering risks associated with that customer for purposes of monitoring the customer’s activities,

All this happen not just with the approval of identity documents but there is search in PEP and sanction lists, identification through different tools - eKYC , media search, entity search - UBO, monitoring, thresholds, restrictions.

Now there are new directives which have established KYCC (know your customer's customer) and take those requirements to the next level and look to who your customers are doing business with, their sources of funds and its legitimacy, and the risk that these third parties are laundering money. In fact, there are 3 stages of money laundering: placement, layering and integration.

CDD process is slow (unless automated but we will see further why this is not yet automated in Onecoin) and in on boarding process if they required KYC documents to be approved they would stop people’s desire to join and this is not good business decision at this ICO stage (good for lawyers). All over the world, this is the practice.

KYC Approved status is required for:
- Rookies if they are frozen, they demand identity document in order to re activate the account
- cash payments, because if you do not know your customer you are forbidden to establish relations according to the regulations as a rule cash payments are forbidden unless important reason allows an exception and after strictly following of their internal Guidance on Cash Handling Procedures.

There are a certain term and/or thresholds or cases where the company demands identity documents:
- next stage layering is a transfer between accounts. They have implemented monitoring and thresholds and some restrictions between countries in order to mitigate the risk for the financing of terrorism (from country to country).
- the most dangerous stage is integration and we do not allow withdrawals without CDD to be concluded, based on risk based approach and it is compulsory KYC documents on this stage to be approved, thus the CEO said that all transactions are KYC verified.

As for Coins, they can not go out of the system at the moment. KYC-Approved status is not required, but a lot of restrictions there are for coin transfers. So with coins at that stage "integration" for kyc-approved status to be required can not be accomplished so it is currently not necessary to have approved documents.

But their aim is even without approved documents to be sure who is behind the account, thus they use eKYC (available for several countries) and other software products for identification (telephone match, email match, media search, entity search).

It is important to understand that it is wrong to assume that if KYC status is required to be approved the company does not know who is behind the account. That is why it is important to explain that KYC is just a part of the CDD process.

“What about if there is identity theft"? Even if they have KYC - this does not mean that behind that account is exactly that person, but their work is to know their real customer and if they detect the fraudster to report him/her to the authorities. Every company deals with this possible scenario.

The whole CDD process is based on understanding the nature and purpose of customer relationships and development of customer risk profiles which is at the heart of the risk mitigation of financial crime and of prevention strategies for regulated firms.

At the moment they are trying to extend the same steps and procedures they have to Know Your Customer to their entire network of connections because OLN can’t accept the higher risk of fraud and non-compliance.

So the most important conclusion is that CDD, KYC/KYB and KYCC are an unstoppable trend and smart companies need to craft an effective strategy now, to set themselves up for the new reality.



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