1. Who writes KYC/AML laws, and what is their purpose?
The article mentions a new law written by Financial Action Task Force (FATF), which if you look up in google you find. In their about page (https://www.fatf-gafi.org/about/) they define themselves as follows: “The Financial Action Task Force (FATF) is the global money laundering and terrorist financing watchdog”.
In other words, governments and state agents write these laws.
They say that the purpose is to fight money laundering, but this is just an excuse, as terrorists sure use other channels then official exchanges. The goal is to control the system, block accounts, chase people and tax them.
2. What type of information is usually collected for KYC compliance?
Here the key information that they collect:
- Identity of the person: first name, last name, birthdate, address
- Passport, identity card or driving license and selfie of person holding the document
- Provenance of funds (bank account statements, salary statements etc.)
- Work related information (position, salary etc.)
3. Who is responsible for enforcing KYC compliance?
Exchanges enforce these laws, because if they are caught in not enforcing them they can get into trouble.
4. Explain how KYC is a threat to privacy.
First of all, we can’t be sure that our private and sensitive information is stored securely (if it’s compromised, criminals may use it to attack you directly or indirectly, by opening accounts using your name etc.). Second, we don’t know if exchanges will share that info with governments. E.g. coinbase was forced a few years ago to disclose with the U.S. taxman a list of their customers, because they wanted to punish them if they didn’t declare their crypto in the tax report.