Why Linkkoin does verify its users?
Why such a requirement was introduced in the first place?
In general, the verification requirement was introduced at a mass scale in 2001 and 2002. Soon after that, there had been introduced the first series of Anti-Money-Laundering legislation worldwide, which covered wire transfers. Both parties of the transfer had to be identifiable. As the years have passed, with the next series of the legislation the verification scope was widened as well to fiat currency exchanges.
Where the cryptocurrencies step in?
On the very beginning, most of the exchanges did not require any verification. But as transactions are irreversible due to the nature of blockchain and the scope of anonymity is much wider (transactions are relatively hard to trace), there was a need to limit any possible safety concerns. Realizing that many exchanges — either by themselves (like we did) or under pressure of their payment service providers started introducing verification procedures to prevent risks which could turn out to be harmful to our customers.
Later on, this was followed by binding legislation. In 2018 European Union passed so-called Anti-Money Laundering IV Regulation, which started to cover cryptocurrency exchanges in the way similar to the banks or fiat exchanges. As the owner of Linkkoin is registered in the UK (at the moment of legislation being passed as well as this article being written, a member state of EU), we are obliged to comply with it and verify on our exchange each user making transactions and their activities on the website in order to eliminate cases/attempts of any criminal activities (like money laundering, identity thefts, crypto ransom, purchasing illegal products and services etc.).
In accordance with that regulation, we have as well to check any "unusual activities" of our customers. This might take different forms (including but not limited to):
- Our payment service provider marking the transaction as a potential fraud/card being stolen/using several cards
- The card used for transaction from a different country than the registration or logging in from abroad
- Using different IPs and devices over a short period of time (especially different countries) or using VPN services
- The different name of the account and card owner
- Sudden change or purchase order size (e.g. if the user will keep buying BTC for $30 per single transaction, and then suddenly for $1000)
- A suspicion that any document provided us could have been forged/photoshopped
How do we verify the user?
For all users (see the video):
- State issued ID (can be ID itself, passport or drivers license) - in order to verify the account faster, we recommend to do it right after registration and before the first transaction.
- The card used for the transaction - in order to verify the account faster, we recommend to do it right after the transaction. We will not be able to verify the card before the transaction takes place!
In case, where in accordance with the Anti-Money Laundering Regulation there is any "unusual activity", our compliance department requires additional verification levels, including (but not limited to):
- Utility bill (like a bank statement, electricity bill or letter from the officials). In cases of further doubt, we might ask for a paper form being signed/stamped or providing us with another utility bill.
- Selfie of the customer with ID and card used for transaction and current date on a piece of paper - so then we can confirm, that the customer is not a victim of identity theft.
- Explanation regarding those "unusual activities" like different login countries at the same time.
- Video verification.