IdentityMind Global, a fraud prevention & risk management platform, has launched a new regulatory compliance solution for initial coin offerings (ICOs).
The new turnkey SaaS solution enables companies to perform required KYC and anti-money laundering (AML) checks on ICO participants. With the US Securities and Exchange Commission (SEC) yet to issue a definitive ruling on ICO tokens, there is uncertainty about which token sales are subject to securities regulations.
IdentityMind CMO Jose Caldera said: “As ICOs become more prevalent, and as money continues to flow into ICOs, regulators globally are starting to take notice. The regulatory risk, in conjunction with the risk of enabling fraudsters, financing of terrorism, and money launderers should motivate organisations performing ICOs to properly identify the participants in the ICO process.”
The company’s new KYC plug-in for ICOs includes a web-ready software client that directs the participant through the entire KYC process. It also provides a platform to perform enhanced due diligence, reports to satisfy examiners and regulatory auditors and validates the risk of Bitcoins used to participate in the ICO.
Despite the SEC yet to clarify its stance on ICOs, different regulators in different countries have taken slightly different stances. The Canadian Securities Administrators previously ruled that ICOs and altcoins are securities, subject to regulations on a case-by-case basis. Israel, Japan and Russia allow ICOs but warn that they are subject to future regulations. While other countries like China and South Korea have moved to ban the offerings.
With that in Mind, IdentityMind’s new solution also includes a preconfigured risk-based KYC ruleset that meets the regulation of the countries where there are detailed regulations and a general KYC process for countries where regulation has not been specified.
“Aite Group research has found that there is a critical mass of young companies that are demonstrating ‘best effort’ to regulators by acting on expert advice from compliance, anti-fraud and AML professionals,” said Kristina Yee, senior analyst for Aite Group’s Retail Banking and Payments practice. “Companies planning ICOs need to work with knowledgeable service providers to implement the appropriate KYC processes. Those entities that have made no or little effort to meet compliance stand out from the compliant crowd and are vulnerable to fines and serious penalties.”
In a recent interview with RegTech Analyst, KYC CEO Claus Christensen called ICOs ‘a recipe for disaster’. The company which provides Know Your Customer and Anti-Money Laundering solutions for rapid ID verification, said it was set to launch a Series A funding round rather than an ICO to ‘stay above board’.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
