Ignite Ratings: Knowing Your Contributor and Anti-Money Laundering Protections
It is generally accepted that any entity raising capital from investors must conduct risk managed due diligence on those who contribute. Ignite is no different, and we are constantly assessing our due diligence processes to ensure our continued compliance with applicable rules and regulations.
KYC and AML — A brief introduction
Know Your Client (“KYC”), Anti-Money Laundering (“AML”), Due Diligence (“DD”), and Proceeds of Crime (“POC”) are all terms which have been deeply ingrained within the financial and legal world for some time now. Lawyers, accountants, and financial institutions have all been, and continue to be, obligated to conduct checks on their prospective clients, whether they be individuals or companies, and verify their source of funds used for payment of services.
Likewise, any transactions over a certain amount must be monitored, and if deemed suspicious (such as repeated transactions of a similar amount), reported. KYC and AML checks include running client names against various international watch lists, and verifying that the source of funds does not originate from blocked or sanctioned countries, or from politically exposed persons.
The importance and seriousness of such checks are to ensure the prevention of POC being laundered, and to prevent the funding of terrorism.
Initial Coin Offerings and KYC/AML
Despite anonymity and decentralisation being rooted in cryptocurrency philosophy, regulations are quickly catching up with the industry to ensure that players in the market are subject to the same rules as traditional institutions. For example, virtual currency exchanges and e-wallet providers have been named by the European Commission as coming within the scope of the AML directive. It is our view, as shared by many others in the industry, that entities conducting Initial Coin Offerings (ICOs) are, by their financial or quasi financial nature, also obliged to be compliant with AML and POC regulations. Certainly it would be imprudent, and potentially reckless, to raise capital from unknown contributors, particularly where large sums of contributions are involved, without conducting such checks.
That being said, there is a lack of explicit regulation for ICOs and limited guidance directing best practice for compliance with KYC and AML obligations. Many large questions need to be answered by regulators. One such question that we at Ignite have been debating is what value threshold we should set for when to undertake enhanced DD on our contributors, and how that corresponds to the ever fluctuating price levels of the cryptocurrencies that contributors use to purchase IGNT tokens.
Ignite’s Due Diligence — So Far, So Good
Ignite implemented whitelisting and KYC verification at a very early stage, shortly after publishing our website and white paper. We are continuing to run a bounty programme whereby potential contributors are encouraged to verify their identity with an offer of 10 free IGNT tokens on completion of the verification process. So far we have been utilising Parity Technologies “PICOPS” KYC (integrated on Ignite’s website) as a tool to conduct our verifications. PICOPS certifies a contributor’s wallet by running an ID background check and linking the wallet to that ID. As a KYC tool it assists us to be compliant by blocking contributions from those who are on major official sanctions watchlists, and preventing the use of multiple Ethereum wallet addresses to bypass KYC threshold levels.
Securing the Future of Ignite
As a first step towards KYC/AML compliance, we recognised that PICOPs could only take us so far. There are limitations with only verifying contributing Ethereum wallet addresses. This was sufficient in the first instance, but we have since opened up the ability of contributors to purchase IGNT tokens using other coins, and needed a method of checking those addresses too.
To cover these gaps in our DD, we are excited to announce that Ignite has now engaged the services of Coinfirm to run specific AML checks on all our contributing wallet addresses during the forthcoming crowdsale on 15th January (and for those who contributed during the presale). By engaging Coinfirm, we are adding yet another layer of security to the Ignite ecosystem that essentially covers the AML services not provided by PICOPS. Coinfirm will provide us with a real time report on the addresses used by our contributors. Every wallet address will receive a private risk assessment and recommendation. If there is any cause for concern, Coinfirm will be instructed to undertake a deeper KYC analysis on the wallet. Then if there is a red flag, Ignite will make the call as to whether or not to block and refund the contribution.
Ignite’s Due Diligence Process
During the crowdsale, Coinfirm will undertake real-time verifications on contributing addresses. This will require no effort on behalf of the contributors as Coinfirm do not require any document or ID submission in order to complete their AML checks. Further, the cost of these checks is being borne entirely by Ignite.
Verification with PICOPs can be undertaken at any time by our contributors, whether before, during, or after the crowdsale. In accordance with the terms of our Token Purchase Agreement, we reserve the right to request that any of contributors complete the process upon demand, with a commitment to refund any purchases if any contributor subsequently fails their verification (subject to a 90 day lock in of contributions made). Any contributors sending amounts greater than 10 ETH may be required to undertake further checks including on source of wealth.
DON’T FORGET THE BOUNTY
Free 10 IGNT tokens for the first 4000 contributors who register and complete the PICOPs verification process (and another 10 free IGNT tokens if you go on to contribute from the certified address in the crowdsale).
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DISCLAIMER: All KYC/AML policies set by Ignite Ratings are subject to ongoing review and risk management and may be subject to change at the discretion of the directors. Policies may also change as a result of any regulatory movements applicable to Ignite. This article does not set out in full the complete terms and conditions regarding Ignite’s KYC/AML procedure. Anyone wishing to contribute in our pre-sale or crowdsale should closely examine the Ignite Token Purchase Agreement for the terms and conditions and expectations on each of our contributors with regards to participating.
