4US and CipherTrace Partner to Bring KYT Standards to Campaign Finance
For the first time political committees can accept crypto contributions and leverage industry leading KYT capabilities to ensure risk is minimized and compliance is maintained.
How this works:
1) Our team will set the committee up with a wallet at one of our preferred wallet issuing partners.
2) The 4US crypto compliance smart contract will be deployed to manage the data exchange between a donor, the committee's wallet issuer and 4US rules engine.
3) When a contribution is proposed, 4US sends the donor's wallet address and additional PII to CipherTrace in order to assess risk - before a transaction is facilitated.
4) If the proposed transaction meets the acceptable risk threshold, and the donation is deemed not to violate campaign finance law, 4US coordinates the transaction to be processed.
5) When the transaction is completed, 4US will record all of the necessary compliance data into the committee's private blockchain, making it readily accessible for disclosure report filing with the committee's regulator.
How does this work with Bitcoin?
Committees will not be given Bitcoin wallets, however, through our preferred wallet issuing partners, they will be able to accept Bitcoin. In order to initiate a Bitcoin transaction, simply go to the committee's online contribution form (their webpage), select "crypto" as the payment method, and enter the required information.
What happens to a crypto transaction that is deemed "risky"?
Committees can customize the level of risk they're willing to accept, however it is recommended to follow the standard we've built with CipherTrace. Proposed contributions that fail the KYT + compliance verification will not be permitted to be processed. When this happens the donor is alerted of the failure in real time and given the ability to communicate with the committee in order to potentially facilitate their contribution through other means.
Why would a crypto transaction be deemed "risky"?
Through CipherTrace, 4US is able to look up and assess risk on a proposed transaction based on the donor's wallet and the asset itself. If it can be determined that the asset is not associated with suspicious/illegal activity, and the donor's wallet is held or was issued by a reputable issuer (where solid KYC practices are known to exist), the KYT standard is met. To confirm compliance with campaign finance law, the PII of the donor is then run through the 4US rules engine and checked for compliance issues such as over the limit contributions. If either the KYT standard or 4US rules engine check fails, the transaction will not be permitted to be processed.
I don't know crypto, is this complicated to set up and manage?
This is why we built 4US. Payment systems are evolving very quickly and crypto is certainly a major reason for/part of this trend. Our team of payments, blockchain and compliance subject matter experts has come together to bring political finance into the future. Our team will walk a committee through setting up everything they need and then let 4US take over facilitating transactions while automating compliance.