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KYC Background Checks for Cryptocurrency Startups

 

Some credible players in the cryotocurrency market have begun collaborating in the development of new standards that will govern Initial Coin Offerings or ICOs. This is because the ICO market is vulnerable to fraud and many people have been fleeced by scams. The standards being contemplated will include “Know Your Customer” (KYC) procedures, which are a required practice for regulated financial institutions and an industry Best Practice for companies in other markets.

 



Essentially, KYC procedures refer to due diligence activities that financial institutions and other regulated companies must perform to ascertain relevant information from their clients for the purpose of doing business with them.

The idea is that knowing your customers – verifying executive team identities, making sure they’re real people, confirming they’re not on any prohibited watch lists, and assessing their risk factors – can keep money laundering, terrorism financing, and other fraud schemes at bay.

What Does KYC Entail?

The first component of KYC is the Customer Identification Program or CIP, which entails obtaining identifying information on a company’s founders and leadership team. Sources may include:

> Certified articles of incorporation

> Government-issued business license

> Partnership agreement

> Financial references

> A background check from a consumer reporting agency

> A financial statement

Many people believe that conducting a due diligence background check is as simple as typing a subject’s name into a search engine or into one of the numerous and inexpensive databases that instantly printout results. This is a mistake.

Search engines do not contain all records on file with courts, credit bureaus, employers and education institutions, and the information contained in databases can vary greatly because there are no legal requirements for anyone to upload records to these databases.

Because consumer reporting agencies have access to courts and other information sources, which makes their reporting much more accurate and reliable, and because using a consumer reporting agency is considered a Best Practice under KYC procedures, a consumer reporting agency should always be engaged to conduct a background check on cryptocurrency or blockchain companies.

SafestHires is a consumer reporting agency that provides KYC background checks to the cryptocurrency market. Our BitCheck Dossier was the first background check product for the industry and is considered the industry standard.

What Does the BitCheck Dossier Include?

It begins with an identity verification. We obtain the names, social security numbers or national identification numbers and dates of birth on the founders and team members. This information is provided to us by the startup with written authorization for us to perform the other searches.

We then move to the work history verification, where we contact the Human Resources Department or equivalent person at the companies where the founders and team members have worked. We verify their positions held, dates of employment, most recent salary and eligibility for re-hire. If anyone was self-employed, we verify this by contacting their past clients.

Next, we verify their education credentials by obtaining a copy of their degree certificate and contacting the college or university they attended to verify the degree they provided to us is legitimate. We also verify their major course of study, their grade point average, dates of attendance and graduation date.

Once we’ve verified their identity, work history and education credentials, we move to the next stage where we check court records to determine fiscal responsibility and find out if they have any criminal convictions.

In the USA and overseas, we are checking for bankruptcies, judgements and other civil records and we also check court records, national criminal database records and terrorist / politically exposed person watch lists.

We then package the results into the BitCheck Dossier and deliver this to the startup. They can feature the dossier as a downloadable file on their website for anyone to see.

A KYC background check should be the very first due-diligence step before investing in a cryptocurrency startup. 

Before you buy any Altcoins/Tokens, ask the startup to purchase a BitCheck Dossier on their founders and team and share it with you. They can contact us here.

 

 



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