The recent upsurge in payment digitization and crowdfunding with the need to put in place proper standards for improved and effectual operations has led to the use of KYC compliance by most companies.
There are several legal reasons for people to invest in ICOs, which stems from maybe trust in the utility of a new crypto-project or conjecture on a particular coin's ascending value. In spite of these reasons, the possibility of money laundering is highly feasible.
It is however very important for companies to know and have vital information about the investors, as doing this will not only help to protect both parties in the business transaction but will also help thwart liability and guard against money laundering and other illicit activities.
KYC which is a short form of 'Know Your Customer', is a customer identification process which helps organizations to determine the real identity of the customer. It helps organizations affirm to regulators that the required due diligence has been carried out on the customer. It provides organizations with the requisite information needed to address risks such as money laundering, terrorist financing, creditworthiness and product suitability all through the business relationship with the customer.
Also, with the recent rise in terrorism globally, it has become very important for organizations to carry out KYC so as to curb against terrorist financing because it can occur on a large or small scale, and could be from both legal and illegal activities.
Using cryptocurrency industry as a case study, the burgeoning of the industry has attracted the influx of new participants and also gained the attention of the media and world governing bodies. One of the critical issues discussed during the last G-20 meeting was the issue of regulations and compliance in the cryptocurrency industry, with a major focus on AML and CTF.
In as much as the cryptocurrency industry has its added advantages, KYC compliance is still a major issue because digital currencies present an added risk of illegal activity funding, and most cryptocurrency firms do not address this issue due to lack of requisite skill needed to keep up with the ever developing compliance regulations. Due to this, several governments have had their resentments towards cryptocurrency participation. A typical example is that of China which recently banned its citizens from participating in cryptocurrency.
In spite of the KYC processes which currently exist, this current model is still ineffectual and centralized, as much of what is being done is the manual and analogue type of KYC process. It is therefore important to address these issues holistically, and this can be achieved with the utilization of blockchain technology due to its immutable, transparent, secure and open nature.
In the bid to provide this platform, Traceto went all out making various research to understand the problems with the current KYC process, why they exist, and how best to address it. From findings, the following issues were observed to be the major issues
- There's an imbalance amongst regulators, businesses and end users
- The KYC compliance level in the cryptocurrency industry is quite conflicting, thus creating a gap between real world and digital world compliance regulations
- Lack of requisite expertise needed in compliance
Traceto aims to leverage on blockchain technology and artificial intelligence provide a platform that will not only address the issues associated with the KYC process but also revolutionize the current e-KYC process and bridge the gap which exists between physical and virtual KYC processes. It aims to provide a decentralized virtual KYC platform to enable compliance with KYC related regulations.
In the bid to achieving this, Traceto came up with 4 basic models on how every organization should conduct KYC process.
• Who Are You? Customers should be able to provide a valid and duly issued government identity card for verification. Examples of such cards include Int'l passport, driver's license, national identity card
• Who Are You Not? Organizations should be able to categorize their customers upon on-boarding into either high, medium or low risk. This will help organizations easily assess customers who are Politically Exposed Persons, terrorists, or profiles with adverse media. In categorizing the customers, it will help organizations guard against terrorist financing or money laundering.
• Are You Still Who You Say You Are? This will help organizations carry put periodic due diligence on the customer, as it's very possible for a customer's information to change over time. Therefore, it is very paramount for organizations to carry out periodic KYC checks throughout the lifecycle of the business relationship with the customer. This will help ensure that the customer is still in compliance with regulations.
• What Did You Do? Organizations are expected to conduct supplemental transaction monitoring on customers. This will help identify huge and wary patterns of operations executed by a customer.
The platform being proposed by Traceto will enable the community to have total authority, management and ownership of KYC processes. From start to end, the KYC process of a customer will be done by the community and KYC providers. This process will eradicate the current model where customer data sits and resides with just one individual or organization, which in turn could result in data silos.
For ICOs, exchanges or crypto firms who intend to make use of Traceto platform will have their membership smart contract, which in turn gives them the capacity to have access to the number of users who have done KYC. Also, individuals will be able to on-board their personally identifiable information (PII) on the platform and pass screening and liveliness test. The Traceto will make use of 'verifiers' to serve as gatekeepers to users' data on the platform. The verifiers are trusted, verified, screened and confirmed users who have staked some of their Traceto tokens in order to have the chance to earn more Traceto tokens by carrying out several KYC related tasks.
For example, if a user wants to join an ICO or crypto exchange, he/she will be redirected to the Traceto platform, and then requested to upload the necessary personally identifiable documents. Upon completion, the documents are encrypted and then stored in the vault on the Traceto platform. However, only the user or community courts have the capacity to allow anyone to view those documents. Furtherance to this, the user's profile is shared with the Traceto's artificial intelligence algorithms and KYC providers. The AI helps with transaction monitoring whilst the community and KYC provider helps with the 'Who Are You', 'Who Are You Not’ and 'Are You Still Who You Say You Are' questions.
Both Individuals and Corporate bodies will have the opportunity to use the decentralized app provided by Traceto. Individuals can start their on-boarding process and also pass their liveliness test by using the app. For Corporates, the app provides an interface to pay for users' KYC requests and also renew them once expired. It enables corporates to have access to users' public key and KYC score.
Verifiers are able to organize and carry out social verification of new entrants, prospective verifiers, and discharge other governing roles. The Traceto community is divided into two circles to effectively manage activities within the platform. The first, being Tracer Circle consist of a small subset of verifiers saddled with the responsibility of handling daily KYC requests on the platform. However, the second which is the Tracerien circle comprises of a set of high proof verifiers who handles bigger tasks such as regulatory access and appeals raised by users. The verifiers are coached by the Traceto network through gamification of KYC process.
Also, other service providers are able to integrate with the app as an interface will be provided to allow them to check any received information and also call the contract with updated scores.
Below table shows how Traceto's model is different from other KYC companies.
TEAM
The team responsible for this revolutionary platform has over 50 years’ experience in KYC across compliance and RegTech.
TOKEN ALLOCATION
The Traceto token (T2T) will be issued in the form of an ERC-20. It will function as a multi-utility token which will be used to fuel the Traceto platform.
Total Supply: 1,000,000,000 T2T
Token symbol: T2T
Hard cap: 30,000 ETH
Current Price: 1 T2T= 0.0000750 ETH
Kindly visit https:https://traceto.io/ for more information.
Whitepaper: https://traceto.io/static/wp/traceto_Whitepaper_v1_35_en.pdf
Twitter: https://twitter.com/tracetoio
Telegram: https://t.me/tracetoio
ANN: https://bitcointalk.org/index.php?topic=3439768
Writer: https://bitcointalk.org/index.php?action=profile;u=1820055;sa=summary