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KYC procedure on VeraCash

VeraCash is now available in most of the countries in the European Economic Area (EEA), so we wanted to give you some more information about the different steps involved in opening an account. And for our current members, this is why we often ask you for information.

Before we can confirm your registration, we need to be able to trust you as much as you trust us. And this is where KYC (Know Your Customer) and KYB (Know Your Business) come into play. If you are already a customer, you have necessarily gone through the KYC procedure.

What is KYC?

VeraCash is an official agent of the financial institution Prepaid Financial Services (PFS), which allows us to issue a Mastercard payment card. As such, we need to verify that you are indeed the person you claim to be. Now, we are not insinuating that you have any reason to conceal your identity, but some people do have excuses for doing so. We’ll circle back to that later…

So, VeraCash asks for a legible copy of your official identification, proof of address and your bank details: this is the submerged part of the iceberg. Without going into too much detail, we have algorithms that check each document to ensure it has not been stolen or falsified and that apply a number of fraud prevention rules. And we can tell you that we receive forged documents every week.

Who is eligible to KYC?

Originally, only banks and insurance companies were eligible to these regulations, but the financial sector continues to change and grow. The European Payment Services Directives PSD1 and PSD2, have allowed a new type of actor – fintech (financial technology) companies – to modernize payment services. Today, fintech companies (like VeraCash) and many other businesses(1) are considered to be financial actors in their own right and so are eligible to all changes to financial regulations, including AML/CFT (anti-money laundering and combating the financing of terrorism).

Why is KYC necessary?

Quite simply because it is a legal obligation. At present, Directive (EU) 2015/849 regulates the European financial system and has since it came into force in June 2017.

The FCA (Financial Conduct Authority) which regulates financial activities in the United Kingdom, and the ACPR in France, ensure that these directives are followed by all financial actors.

The ACPR recently asked our e-banking partner PFS to conform to certain new developments in AML/CFT legislation. As a result of the domino effect, PFS in turn asked us to add some extra verifications to our KYC procedure.

By extension – and most importantly – KYC allows us to offer a safe service to all our users, on which excludes fraudsters, money launderers, terrorists and so on. As a customer of our platform, you are also protected against identity theft and attempts to hack into your account. With these aims in mind, we have on occasion had to apply stricter certain conditions over time, to improve security for our members’ accounts and to guarantee the integrity of our system as a whole.

If VeraCash were to permit the financing of illegal activities, like anonymous arms purchases for terrorists and money laundering, with complete impunity, all our customers would eventually be negatively affected. Yes, we know those cases may seem a little extreme, but they are nonetheless a reality in the financial world of today. Why do you think hackers demand payment in Bitcoin when they attack companies with ransomware(2)? The answer is simple: because this protects their anonymity.

[Spoiler Alert] The true story of a bank which voluntarily foregoes KYC!

Netflix has a docuseries called Dirty Money. One of its episodes is devoted to HSBC, that became the preferred financial institution of Mexican drug cartels a few years back, simply because there was no KYC process involved in opening an account.

The bank is accused of having laundered hundreds of millions of dollars for the Sinaloa Cartel ($800 million in total) and of being indirectly responsible for the deaths of more than 10,000 Mexicans.

The bank avoided prosecution by paying a fine of just $1.9 billion, negotiated with the US Department of Justice in return for dropping the charges… equivalent to just five weeks of their net profit.

What are the KYC and KYB procedures in effect at VeraCash?

In a perfect world, we would love to just ask for an email address to open an account. Alas, that perfect world does not exist. Rest assured, we have as little red tape as possible, while still following the law and guaranteeing maximum security for your personal account.

If you would like to create a free account, this means you will need to fulfill our verification procedures:

For a personal account:

  • Provide these three documents:
    1. A current copy of your official identification;
    2. Proof of address dated within the last three months;
    3. Bank details.
  • Fill in your profile.

For a youth account:

The same as for a personal account, plus:

  • Proof of parenthood/guardianship;
  • A letter of authorization signed by the legal guardian.

For a business account (KYB):

The same as for a personal account, plus:

  • The company’s registration certificate;
  • The company’s by-laws.

More info on how to open an account

Some of you may be surprised to be asked for supporting documentation when crediting your VeraCash account. In this case, anti-money laundering rules apply, so proof of the source of your funds will be required in the following instances:

  • a credit in excess of €20,000, transferred to your account;
  • each credit to your account if its balance is higher than €20,000.

Is my information secure?

Even before the implementation of the GDPR, keeping your information secure was already a priority for us: our servers are encrypted (SSL and TLS 1.2) and are audited on a regular basis by information systems security professionals.

Obviously we do not sell your personal information to any other business organization. It will remain exclusively in the custody of VeraCash and our e-banking partner PFS. Only the authorities will be able to access it in the event of criminal proceedings, which is extremely rare.

Now you know everything!

At this point, we hope we have reassured you that VeraCash is taking every measure to offer a sound, secure environment for all. For the majority of people who have done nothing wrong – and we have no doubt that you are among them – registration is completely free, with no subscription fees.

And if you still have questions, we are at your disposal via chat, email, phone or Facebook… In short, wherever you go to find us! 😉

(1) Many types of businesses are now eligible to AML/CFT efforts, including insurance companies and brokers, provident institutions, supplementary health insurers, insurance, reinsurance and capitalization associations, chartered accountants and employees authorized to exercise the profession of chartered accountant, lawyers, solicitors before courts of appeal, notaries, process servers and more.

(2) According to software vendor Kaspersky, “Ransomware is malicious software that infects your computer and displays messages demanding a fee to be paid in order for your system to work again. This class of malware is a criminal moneymaking scheme that can be installed through deceptive links in an email message, instant message or website. It has the ability to lock a computer screen or encrypt important, predetermined files with a password.”