Why Verification at Bonpay is Not as Scary as You Might Think

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Identity verification is a touchy subject for the cryptocurrency enthusiasts. From one point of view, cryptocurrencies were meant to be anonymous, and all attempts to learn the identities of users are seen as a direct attack on the fundamental human rights. From the other one, when a fellow enthusiast tricks his co–hobbyists out of some BTC, the plea for anonymity gets forgotten, and everyone starts looking for a way to reveal the traitors’ identity.

When we only imagined Bonpay, we already knew that we’d have to find some middle ground. And we believe that we found a suitable compromise between the desire for anonymity and the need for security.

Why Bonpay needs verification

Here’s the thing: we wouldn’t need it if Bonpay were a just another online Bitcoin wallet. But Bonpay is not just a wallet—it is also a card. And soon, a payment system. Which means that we have to comply with many different policies in order to be able to partner with banks, other payment systems and card issuers. One of such policies is KYC and it demands that we verify identities of all customers. Without it, all our partners would never sign a contract with Bonpay, deeming it too risky.

What is KYC

KYC, a.k.a. Know Your Customer, is a mandatory process for all banking card providers (and pretty much all online merchants too). It involves a surface–level identity check for everyone using the service. In Finances and other high-value industries, a common solution is to request a picture of the customers’ ID.

KYC is a part of the more extensive process called CDD—Customer Due Diligence. It is meant to prevent money laundering, financing terrorism, and other high-scale criminal operations.

Why Bonpay needs KYC

Without KYC, Bonpay just won’t be able to operate. Any card issuing provider, like VISA or MasterCard, won’t even start negotiations with a company that does not implement KYC. It may be a hard pill to swallow for some of our customers, but it is the only way.

Why some other companies don’t require KYC

Know Your Customer and Customer Due Diligence are mandatory procedures today for any company which provides financial services. Any company that doesn’t do KYC is either:

  • Incompetent and puts both themselves and their customers at an enormous risk;
  • Malevolent and will run to the hills with your money once they decide they have enough;
  • Working outside the CDD jurisdiction and will require KYC once they are an established company in a country that requires one.

Who sets the KYC standards

There is no international standard for the KYC procedure. That said, many countries have somewhat similar laws and organizations dedicated to the customer verification and prevention of money laundering.

The European Union has a Joint Money Laundering Steering Group that provides the KYC standards. Some EU members also have additional standards:

  • United Kingdom has separate Money Laundering Regulations, established in 2017;
  • Luxembourg has Anti-Money Laundering laws and regulations, established in 1993 and updated constantly (last time was in 2015);
  • Italy has a Central Bank decree that demands for the financials institutions in the Italian territory to comply with the KYC.

Similars laws are in place in Australia, Canada, India, Namibia, South Africa, and the United States of America. Wikipedia provides a suitable breakdown of the current laws.

Sanctions policy

KYC is also a precondition of complying with the sanctions policy.

All UK legal entities established under UK law, including their branches, must comply with UK financial sanctions that are in force, irrespective of where their activities take place. This requirement applies to natural and legal persons, entities and bodies in the UK or under UK jurisdiction and not just to credit or financial institutions or to individuals working for them.

Any company that fails to comply with the sanctions policy requirements will be committing an offence, which may result in a criminal prosecution or a monetary penalty.

How verification helps Bonpay customers

With verification, we can provide better protection and authentication methods for our customers. Here is just one story, where account verification saved our customer’s money.

A customer had submitted a request via email to reset their Bonpay account password. A standard procedure here is to confirm their identity, so we requested a picture of their ID. They refused, but insisted we restore the access nonetheless. We denied their request. Later on we discovered that customer’s email was compromised and hackers made the previous request. The real customer asked to switch the account to a different email address. Once again, we requested the ID, they quickly provided a picture and we helped them to re-secure their access to the wallet.

Verification also allows us to refuse service to the known scammers before they scam more people, restore access to the accounts with lost credentials and overall provide better and more streamlined experience to all our customers.

How verification works at Bonpay

To fulfill the KYC requirements, we need:

  • A phone number;
  • An email;
  • An ID, a travel passport or a driver license;
  • An address (confirmed via the utility payment checks or the bank statement).

You can access a Verification tab in Your Account, where you can see what you need to upload to complete verification. You can verify your account only by uploading scans on our website – otherwise (e.g, if you attach your files to an email sent to support team) we will not be able to process your information.

Once we have all the necessary files, we review them using the standard verification services used by many other banks, and compare the data to the information submitted by the user during the account registration. If everything is correct, the user gets a new status “Verified” and receives an email about the successful verification.

We may share the user’s information with the third parties involved in the execution of transactions (banking partners, transactions facilitators, payment providers) or with the public authorities to comply with the applicable law. We do not share it with anyone else without a user’s request or court-approved inquiry.

As you can see, the verification process at Bonpay is not as scary as it may seem to some people. You do have to share your data with us, but it’s not because we collect it for nefarious goals. We need it to protect you from scammers and hackers, as well as fulfill the international rules and processes necessary for us to operate.

If anything about our personal data processes management changes, we will update this article and send an email to all our customers.

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