A bitcoin exchange in India has published a compliance policy for dealing with clients in terms of bitcoin transfers. BTCXIndia has reproduced the standard Know Your Customer and Anti-Money Laundering (KYC/AML) policy used by financial institutions and tailored the requirements to fit a typical bitcoin customer and transaction.
The KYC/AML guidelines focus on a customer acceptance policy, identification procedures, transaction monitoring and risk management. In brief, anyone who wants to open an exchange account with BTCXIndia will undergo the same due diligence as a client opening a regular bank account. Identification processes will include scrutiny of beneficial owners, monitoring will look for complex, unusually large transactions and BTCXIndia has hinted that it will set thresholds for transaction limits if required. Remittances worth more than INR50,000 (USD798, XBT0.836) will be effected by debit to the customer’s account or against cheques and there will be no cash transactions through the firm at all, which would reduce some of its risks.
The exchange has committed itself to creating risk profiles for all customers, based on low, medium and high categories and using information derived from their identity, social/ financial status, nature of business activity, information about his clients’ business and their location. Salaried employees, government owned companies, regulators will fall into the low risk group, along with any client whose financial/business information is easy to acquire, barring high net worth individuals who will not automatically receive low risk status.
High risk examples
Customers who will require a higher level of due diligence checks, according to the policy, include:
(a) non-resident customers;
(b) high net worth individuals;
(c) trusts, charities, NGOs and organizations receiving donations;
(d) companies having close family shareholding or beneficial ownership;
(e) firms with ‘sleeping partners’;
(f) politically exposed persons (PEPs) of foreign origin;
(g) non-face-to-face customers and
(h) those with dubious reputation as per public information available.
The policy sets out clearly what the company expects from its customers and staff in terms of AML compliance and it is worth reading the policy to see just how BTCXIndia is managing this.
The Reserve Bank of India, the regulatory body for banks and Bitcoin exchanges has vaguely mentioned that it is “watching” the crypto-currency but has not yet clarified what that means. BTCXIndia has published a useful guide on the latest legal commentary from different jurisdictions on status of bitcoin use.