There are established rules and laws that regulate the transfer of money to individuals or entities for >$10,000 per transaction or >$100,000 transfer volume to prevent sanctioned activities linked to terrorist financing and money laundering. Compliance is mandatory without exceptions, and Bounty Curators need to realize there are real world consequences for distributing cryptocurrency as payments and not complying with these regulatory reporting mandates.
Even in the absence of protocol-level KYC tools, bounty curators must comply with local laws when distributing payments (depending on the jurisdiction the transaction value varies from $3,000 - $5,000 or over $100,000 in volume – especially payments that crosses borders) to individuals or entities. Curators are obligated to maintain robust records of child bounty proposals and all bounty transaction details. Failure to keep accurate records can lead to severe penalties, including fines and potential criminal charges.
Is there any reason why Polkadot/W3F doesn't use or require the Kilt / Deloitte KYC DID offerings? Those seem to be great solutions that protect privacy, maintains anonymity and gives the user complete control over their data and identity - while maintaining compliance for AML/KYC. Integrating this as part of the funding process should be considered and required for anyone that wishes to receive DOT from the Treasury.
Most people in the U.S. know that if they walk into a bank with $10,001 in cash and try to deposit or make a transfer, their account and transaction will be reported to the IRS by that bank. Why would anyone think the same rule would not apply to cryptocurrency? Decentralization does not exempt anyone from these laws or financial regulations. This has nothing to do with the definition of crypto as a securities or which regulatory body can enforce crypto. There are patterns that identify high risk accounts that lead to criminal activities, which algorithms and software are in place monitoring all transactions across regulated banks to decentralized cryptos. Those high volume transfer accounts that lack the required documentation and records will lead to criminal charges like tax evasion, fraud, embezzlement, and more.
You can learn more about AML/KYC regulations here:
https://kyc360.com/knowledge-hub/resources/anti-money-laundering-regulations-a-comprehensive-guide#section-4
Standard AML/KYC Requirements Across All Jurisdictions:
Record Keeping Requirements:
• Recipient identities
• Transaction amounts
• Timestamps
• Purpose of payments
• Service verification
• Distribution records
• Wallet addresses
• Exchange rates
Tax Obligations:
• Annual declarations
• Income reporting
• Capital gains tracking
• Business activity registration
• VAT/sales tax where applicable
Compliance Requirements:
• AML/CTF procedures
• KYC documentation
• Source of funds verification
• Suspicious activity reporting
• Large transaction reporting
Business Operations:
• Proper licensing
• Registration with authorities
• Regular reporting
• Audit trails
• Bank transaction records