As many of you know, KYC is a crime-prevention regime that banks use in order to provide due-diligence in identifying their customers, and ultimately identifying terrorist activity and money-laundering crimes.

If you live in the USA, the Patriot Act compels banks to develop this program for properly identifying its customers, and then monitoring them on an ongoing basis to ensure regulatory compliance.

If you live in Canada, there is a strict regime for who can even ask for these types of documents, and I assure you, blogging websites like Narrative ain't one of them.

 This brings us to ask a few logical & legal questions:

1. Is it even legal for a blogging company to ask for, much less retain indefinitely, regulatory compliance for anti-terrorist activity for a first amendment right?  Imagine walking into a church or a university in the USA and demanding KYC documents from the speaker. You'd be escorted to the door very quickly, if not arrested for breaching the peace.

2. *IF* it is legal (ONLY to be determined by a lawyer) for Narrative to collect anti-terrorism documents for a blogging website, how will they secure that information? Where will it be stored? Who has legal access to it? Has the narrative team been approved by the state/federal level to retain this information? As a community we will need very clear answers to every single one of these questions.

Who in the company will be privy to that information?

What, exactly, will they be using it for, and which laws, exactly, will they be referencing when using that privileged information?

How, exactly, will they execute using this information, without breaching privacy laws by showing it to others on the Narrative team?

3. What happens to the Narrative company when there is a data breach? Imagine a class-action lawsuit from any of the 195 or so countries in the world, for either asking, retaining, or divulging this information. If you think this is unlikely, you're almost certainly wrong. Governments all over the world have already, or are re-writing legislation right now to better protect the 'digital state' within the nation state.

4. By punishing those citizens who rightly refuse to provide anti-terrorism documents to a blogging website, is Narrative breaking the 'free speech' laws in that country? (First Amendment is a constitutional right, remember?)

5. Which privacy lawyers, or constitutional lawyers has Narrative hired to make sure they're in compliance with this anti-terrorism regime? (This is a must-answer)

6. If Narrative financially punishes those that do not submit anti-terrorist documents, does that contradict the protected-speech laws in said countries?

Conclusion:

I ask these questions, not to stir trouble for the Narrative company, but rather, the corollary. By asking these questions now, and having them answered ONLY by a lawyer, will it save Narrative a huge headache later from being sued, or worse, from having the platform shut-down because of lack of legal due-diligence on whether they're collection of anti-terrorism documents is even legal.

These are perfectly legitimate questions, and should not be explained away by team members talking about vague 'quality of bloggers' or any of that nonsense. This is a very big deal.

Never in my life have I heard of a blogging company ask for anti-terrorism or money-laundering documents, so this quick list of questions is just the start of the discussion. 

Most certainly we all should start asking around in the legal community to see if this type of activity is going to land Narrative in hot water.

Original Post

Hey Michael,

A lot of important questions there and I suspect answers to many of them will be forthcoming in time.

I am not lawyer, and I second that these questions can only ultimately be addressed by one, but a couple of thoughts from my direction nonetheless.

KYC has been used in the contexts that you outlined (anti-terrorism, money laundering prevention etc) but my guess is we are going to see a proliferation of other use cases for it as blockchain continues to grow.  The reasons are probably self-evident and don't require too much delving into.  Suffice it to say that many blockchain applications will derive their use cases from reliable record keeping, and establishing a person's identity is central to those use cases.  For this reason, it is probably best not to call KYC 'anti-terrorism documents'?  They are just documents to establish identity.

We are probably heading rapidly towards a future where most of the active population will have provided KYC to one of many blockchain identification services, which they can then choose to share with various applications when required and as they see fit.

My intuition would be to suspect it is perfectly legal for a private company to require identification before it allows access to certain services.  The Canadian page you linked to did not seem to make any claims that types of entities not listed were prohibited from requesting identification from the public.

Narrative won't be preventing people from using the platform if they don't provide KYC, so first amendment questions do not seem to apply.  As for 'punishing' ('not giving access' is a less loaded term perhaps) those who refuse to KYC, I have difficulty seeing how not meeting the criteria for a financial opportunity might infringe upon free speech, in and of itself.

The question of storage and how the info is used internally is where I see the real legal questions being pertinent, and I hope the team gets all those ducks in a row at the right time.

Hi @Malkazoid.

 

I always appreciate your sense of intuition, but we should look deeper. Over the next few weeks, I'm going to try to get some legal opinions about this.

I strongly recommend that the Narrative community to hold off on submitting any personal documentation to this company until we know more about its legality as applied to my original post.

Also, do you have the physical address of the registered corporation of the Narrative company? I want to double-check which state it's registered in, and I'll need to provide that info when getting opinions.

(I'll be back later tonight, have to pick up my daughter for a play-date)

Michael posted:

Hi @Malkazoid.

I always appreciate your sense of intuition, but we should look deeper. Over the next few weeks, I'm going to try to get some legal opinions about this.

Thanks Michael, and like I said - no arguments there: a lawyer certainly should be the end goal for all of this.  Thanks for looking into it.

I strongly recommend that the Narrative community to hold off on submitting any personal documentation to this company until we know more about its legality as applied to my original post.

For many of us, we already have.  It was a requirement to participate in the ICO.  I personally have no concerns about having done so, although I do appreciate that we should ultimately have all of this spelled out clearly in black and white.

Also, do you have the physical address of the registered corporation of the Narrative company? I want to double-check which state it's registered in, and I'll need to provide that info when getting opinions.

I know they are in South Carolina, but can't say for certain that the company is registered in that state originally.  Many companies register in the state that offers the best set of rules as applied to their activities.  My guess is their headquarters address is on the main web site, but maybe hit up Ted or Rosemary to get a fix on where the company is registered?

(I'll be back later tonight, have to pick up my daughter for a play-date)

We have (and will) access legal counsel as necessary, as a corporate entity (of course). Narrative Company is a registered Delaware corporation, with headquarters in South Carolina.

As Ted noted in a different forum topic:

I understand your concerns.  Like you said, KYC will not be required to use Narrative, but we do think it is critical piece of the puzzle for maintaining the integrity of the system.  We are only using KYC to prove that the person is a real AND to verify age (because of the content rating system that will be in place).

This optional, extra layer will help to validate higher-reputation people in the network and minimize the impact of bad actors and bots.

Remember there is a difference between account verification (checking to verify that someone is a real person, and checking their age) and complying with AML and anti-terrorism regulations.

For those Narrative members who want to do so, we will be doing the verification portion (similar to what Twitter and Facebook already do), but will NOT be doing AML or anti-terrorism checks. As you rightly noted, there's no need for that, and we wouldn't even want to collect that information. 

I hope this helps clarify, but let me know if you have more questions!

Thanks, @Rosemary!

Smart decision to do the corp in Delaware. I'm part of a few projects that take advantage of incorporating in Delaware.

Obviously, I'm a huge fan of what the Narrative team is doing, and aside from some of the privacy concerns, I think this project has real potential.

"For those Narrative members who want to do so, we will be doing the verification portion (similar to what Twitter and Facebook already do), but will NOT be doing AML or anti-terrorism checks. As you rightly noted, there's no need for that, and we wouldn't even want to collect that information."

I do have a few questions:

1. Precisely what information will you be asking for to verify someone's identity and verify their age?

2. I'm still confused as to why popular members of the community should have to adhere to a KYC to receive a better reputation. My understanding is that the content is king. (Think of the thousands of verified Twitter users that put out garbage tweets)

Take me through a scenario where two equally popular Narrators, one with KYC & one without, should have any differentiation in rewards or reputation because one submitted privileged documents to your company. I feel strongly that a Narrator should be judged by the color of their character, content, and actions, rather than having to divulge their identity to a corporation.

3. What I have concerns with, is that a strategy like this seems to reward the further erosion of privacy across borders. It creates a discrimination, or inequality, between those that value their privacy, and those that don't really care.

That being said, if Narrative becomes big enough, surely there'll be scammers (think Twitter & Ether Giveaways) if/when the user base becomes large enough to harbor the inevitable hoards of evildoers at the gate.

Maybe I should add for clarity that I personally have no problem with KYC, and it's needed by most banks and online exchanges. (Money service businesses) 

I try to raise a voice for those people in countries where voicing an opinion can mean prison time. There's no way that their reputation shouldn't be equal, all things considered. I don't think their reputation should be a lesser-value, because it's the content that is valuable. 

I'm a trusted traveler in the USA, former military (Information Systems), former civilian IT, and I've supplied my KYC to many, many online sources.

I feel as though privacy is becoming a precious commodity, and that it should be valued just as deeply as the right to voice an opinion. I understand that some people might feel as though this is no big deal, but sooner or later, that private information may fall into the wrong hands. (Think Edward Snowden, Facebook, Cambridge Analytica, etc...)

My understanding is verifying Real People allows better control over the reputation system.  For instance, a Real Person's votes would count for a bit more than someone who could be a bot, due to the boost in reputation.

It is conceivable that one could create a legion of fake accounts and grow their reputation by paying a crew of low-pay workers or coding bots to carry out certain reputation building activities.  These fake accounts, designed with the malicious intent of swaying elections and boosting people's content, would at least be curtailed in their effect on the network because they would not be verifiable as Real People.

I can see arguments for wanting to reserve certain functions to people we know to be real.  Moderators for instance.  Otherwise one real world person could conceivably man several accounts that end up constituting all the moderation slots of a niche, negating the mitigating effects of balancing powers.

A similar argument could be made for niche ownership.  If you allow people to own niches without KYC, they can completely bypass the niche ownership limit by using several accounts.  This flaw actually exists right now.  I had to KYC for the ICO, but my partner joined Narrative after the ICO and bought niches without needing to do anything to prove she is a real person.  She could have been me!  People could conceivably buy hundreds of niches just by creating multiple accounts.  

It is late here and I have a deadline, but I doubt I've thought up all the reasons why encouraging users to let the network know they are real people is highly desirable.  If Narrative is easily gamed, we'll rapidly get the reputation of having failed to improve upon the shortcomings of Steemit.

I appreciate the privacy concerns for people who could suffer real repercussions for voicing their views.  The same problem exists currently on all social network platforms: if they are hacked, it becomes possible for governments to access identifiers.  Because the playing field is level in this sense, I feel the benefits to our network outweigh the downside.

I also think Narrative can set up a robust security work flow surrounding the KYC data.  If it needs to be retained at all, it could be stored in an offline system.  But really, once someone has been identified as a real person, that fact can exist as a single bit of information associated with their profile in the online portion of the system, meaning a hacker would learn no more about them by hacking their account, than if they had not performed the KYC.

I was about to wade in But then saw that @Malkazoid has already covered what I would say. 

I struggle with my balance of privacy and online extrovert activities. As an example, I hate when banks ask me questions about where my money comes from. My instinct is MIND YOUR OWN BUSINESS, and just put it in my account. 

That said, personally I am supportive of the voluntary KYC being tied into the reputation system. I feel that it does add layers of credibility to you and so why shouldn't it be counted towards reputation. If you are a legit person, not a bot --that is a layer. If you are prepared to offer the KYC, there is probably less hesitation in claiming Narrative as taxable income. Why shouldn't these be counted as reputation building?

I think it is great that Narrative offers the choice. I also think it is great that Narrative is taking the steps to reward the people who take the time to complete KYC submission. It demonstrates once again that Narrative understands that time has worth for it's community.

Where I do agree with you is that each country involved in Narrative needs to be addressed by it's laws and regulations, not just USA. But again, this is another case supporting KYC.

I had to KYC for the ICO, but my partner joined Narrative after the ICO and bought niches without needing to do anything to prove she is a real person.

 

I actually thought of that; a friend of mine had to borrow my computer for something not that long ago and used it to join Narrative. And my concern is that the staff and/or other members might think she's a bot or "sockpuppet" account because I don't think she intends to do KYC. She says it kind of defeats the purpose of being in the cryptocurrency space and dodges fiat-to-crypto exchanges for the same reason.

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