Libra Compliance

Greetings,
I’d love to start the discussion on Compliance, specifically KYC and AML. Each country has it’s own variation but G7 has put out well known standards. In this topic I’d like to discuss the specifics of Compliance, s.a.

  1. How KYC will be enforced during the on-boarding and on-going, especially when 3 party provider creates a wallet?

  2. How AML is monitored and reported? Who generates SAR?

  3. What’s the level of the integration required between the Libra financial transactions and the social site to satisfy regulatory compliance and how Privacy concerns are addressed in this case?

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I think current Libra KYC and AML is done on the wallet level, more specifically or likely, in terms of fiat in-out

Michael_NodePacific - It does make sense, but in that case who and how enforces AML and other screenings (e.g. OFAC)?

under current Libra governance, it should be wallet or payment providers’ responsibility to compliant with local regulator requirements. For example, Calibra gets US licenses to acquire US customers.

Similar to current traditional payment system, it is bank’s responsibility to screen KYC customers not SWIFT.

Michael_NodePacific - That’s implied and well understood, but raises additional questions:

  1. Who and how will validate that a wallet provider indeed complies with all local regulations while keeping user experience at the high satisfaction levels? Libra Association? What’s the process?
  2. Who carries the liability if the wallet provider doesn’t comply?
  3. How Libra becomes a true global coin enabling global eCommerce using a single customer wallet when regulations around the globe are different and a single customer wallet must satisfy all of them?

Local authority will provide guideline for wallets. At this moment, crypto wallets are regulated under FINCEN and Money transmitting licenses, for example in USA (so local authority). I do not think Libra association currently have framework to regulate wallets, although I suggest Libra main-net should build some APIs for regulator to connect and monitor on the Libra level.

As you said, single wallet with local authority cannot bear the responsibility for the global transactions easily. Having said that, Libra’s mission is for those living in the third world cannot afford the transaction costs. Usually they do not have a strict local authority.

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I am not sure whether it makes sense that the wallet is responsible for the KYC. Think of it as a physical wallet, which you can buy at any store without having to identify yourself, because it will be an empty wallet.

As soon as you start using it, the identity of yourself should be verified, but again not by the wallet, but I think by the “Libra-net” itself.

There are two use-cases when you have an empty wallet:

  1. Either you mint some Libra when you deposit fiat into the reserve
  2. You receive some Libra from a “friend”

Theoretically 2) would not need identity verification, because your “friend” should have done a proper KYC already through 1), but let’s be realistic, a KYC through 1) might not be bulletproof and therefore it could make sense, at least for “bigger” transactions.

The current trend seems to be that each government will allow certified E-ID providers (see for example https://www.swissid.ch/ or https://www.c-b-f-s.com/), which means the actual KYC could be done through such E-ID providers and the “Libra-net” just has to do the verification (for example using the public key of the E-ID provider).

One challenge though is that these E-ID providers are under different jurisdictions and that the regulations can be different, for example Switzerland allows micro-transactions as replacement for video chat identification, whereas Germany does not yet.

Therefore some countries might not allow transactions from certain countries.

It would be very interesting to hear from the Libra folks how these various challenges could be solved.

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According to the following video

David Marcus is stating that

  • A user will have to open a specific Calibra account (users will not be able to use their Facebook account)
  • And in order to do that, a user will have to upload a government issued ID to identify and meet the KYC requirements

According to

https://globalfindex.worldbank.org/

about 1.7 biilion adults globally (2017) are unbanked, wheras lack of documentation and distrust in the financial system were both cited
by roughly a fifth of adults without a financial institution account.

In Nigeria the current CBN Governor is doing a great job managing all the levels of financial advisory and regulatory services and structure integrity including the relationships within the Bankers committee.
However i applaud his vision, not being ignorant of the digital space and how it is fast redefining the way we do business in Nigeria…ask for LIBRA, to gain basic acceptance our presence and ethos must comply with the existing standards, and I see LIBRA as a matter of fact lifting the bench, and increasing reliability and trust(a disruption that is delight-some) with the style we are proposing during the launch stages here in Nigeria.

I have however reached out to the Media team of LIBRA and am yet expecting there reply and email…,in corporate communications, Packaging is everything, how you package yourself , would reflect on how you would be received, our launch stages can’t be treated lightly as a matter of fact. I trust the crop of LIBRA team, however i believe we should have an arrangement that would make us be very much-at-home with the Nigerian financial sector and community.
I propose the LIBRA Launch within each regions and central cities, should be synchronized and celebrated, followed collectively…giving great push considering the anticipation levels from most quarters ,so it would be used as an occasion to introduce and repeat stronger emphasis on the LIBRA Brand strengths and essence to both the locals and relative audience, as matter of standard.