Alternative Proposal on Blockchain AML/CTF Compliance from GlobalLedger.

Summary of the proposal:

GlobalLedger is offering a cost-effective set of compliance tools and services for Polkadot ecosystem projects enabling them to qualify for VASP licenses, engagements with TradFi institutions, onboard and maintain MiCa-compliant stablecoins, provide decision support data for regulators, maintain listing at Centralized exchanges in tightening regulatory environment and more.

Why is this proposal better than others?

• Cost.
  Significantly lower cost for the treasury to get essential tools and benefits (only 20000 DOT) with a flexible schedule and follow-up approvals for budget from the community.
• Speed.
  The first deliverables of essential compliance tools and cybercrime protection for the Relay chain will be ready in 3-4 weeks.
• Inclusive assess.
  Everyone in the community will be able to use the tools, materials, and services for their own personal or business benefits. We teach you and make sure you do get the benefits.
• More Parachains.
  The community will be able to vote for 10 additional parachains to be supported in later stages.

Another proposal on AML?

We are aware that there is a proposal from another company on this matter and its background, so we want to provide at least one alternative option to the community.

We understand that another offer is from a big brand so instead of a “strategic partnership with a big brand” we bring practical substance: software, education, consulting, return stolen funds service, available to everyone in the community for 3 years. All of this with a clear plan and ROI.

In contrast, we also understand that at the current stage of development, it is too early to call compliance a limiting factor for the growth and institutional adoption for Polkadot. Large investments in compliance may shift the focus from growth and create more risks for DOT price than opportunities. So we came up with a "bet small, start early" type of proposal, to give the community the ability to fight back cybercrime and AML risks as early as possible without significant spending.

This referenda asks for only 20000 DOT commitment (not millions) for the Phase 0 delivery. This provides essential tools and support that everyone will be able to test and decide on future phases (see the formal proposal). The following phases shall be approved as separate proposals as the ecosystem grows and naturally would require more sophisticated tools, better performance, and more services.

We also see many concerns about privacy, applicability, and ROI that we want to address specifically, during following video sessions.

🤓But before let's debunk a few myths:

• "Company X is accepted/recommended by regulators while other companies are not."

The truth is: that regulators can not be biased and recommend certain companies.  There are no whitelists, chosen firm boards, standards, or laws written with certain company names. 

Just like there is no mandate on which blockchain explorer to use, there is no mandate on which software to use for AML.

Here is an example from FATF standards:

"VASPs should implement appropriate measures to identify and verify the identity of their customers, including through the use of reliable, independent source documents, data, or information (electronic or otherwise), as well as software that can aid in identifying suspicious activity and the sources of funds."

So as long as you can identify the source of funds (or Use of Funds) and verify blockchain data and labels - it's enough. In fact, if you use Blockchain Explorer and put your labels on it, you can fulfill the requirement, it just takes 100X more time for research and it is harder with darknet, mixing, and cybercrime research for example.

GL has a track record with entities like the Euro Council or UNODC and checks around 100-300K requests per day for its EU clients. Just enough authority in the right locality.

• "Older companies have bigger databases, especially for illicit activities"

The truth: Polkadot is fairly new and does not have an extensive track record of illicit activities and cybercrime. So all companies are in the same position here.

It is more important how fast you get new updates because you might not want to help hackers process funds stolen 20 minutes ago from your community buddies.

For Polkadot especially, the current speed is more important than SilkRoad wallets last active in 2012. (However, we have them too).

• "Blockchain analytics software is created to spy on people"

While this is partially true, the direction of “spying” is dependent on who operates the tool. In fact with a tool in your hand, you can check out how governments are selling seized crypto, who is donating to certain political groups, etc.

We were building our company believing in blockchain transparency and equality, so we provide equal opportunity to utilize the transparency.

BTW. By GDPR regulations in the EU, blockchain analytics companies can not store personal data, so deanonymization and labeling are only applicable to entities like exchanges, services, merchants, and also illicit activity, your personal data is out of reach.

Plan and next steps:

Step 1: Check our formal proposal for details on deliverables and benefits for you

Step 2: Join us at the upcoming AAG video sessions, where we will address questions like ROI calculation, privacy concerns, and practical applicability. If things like VASP, MiCA, and FATF are new terms for you and you have doubts if it applies to your case, join for sure.
(The presentation will be attached to the proposal)

Step 3: Question, and Vote for this proposal.

Step 4: (If accepted) Test first deliverables. We will guide you through.

Step 5: (If accepted) Decide and Vote for follow-up milestones based on your opinion after the test. Join online and offline events with policymakers and institutions. Receive tools and guidance applicable to your project needs as you grow.