But, I'm also aware and understand that different country applies different rules. Maybe IRS staff may asked what the tax staff in my country aren't allowed to. So, since you're stating that you're based in Sechyelles, could you point us to the regulation article specifically mentioning this matter? I'm sure we're one google away to verify that if you can help with the article number.
Seychelles does not regulate these issues. However, we work as an international company and are obliged to respond to requests from law enforcement agencies for information, as well as the freezing of funds. Otherwise, sanctions may be imposed on our service, as a result of which the existence of the service will be impossible.
You mean as in morally obligated? As in you're not actually required by Sechyelles, but you want to be a law abiding citizen and friendly neighborhood err... exchange, so you choose to be nosy and ask for the sources? Or is it legally obligated by some international law? I can understand that maybe there's a global law that applied against AML-ATF that we are somehow didn't aware of its existence. But rest assured, you can just state the article number and we're back on track. The question, simplified, is: are you just being nosy or can you point us to the regulation that made you authorized to ask people to provide proof of source of fund.
It'll be quite a different story if by asking to provide, you were meaning to say that your clients just needed to state where it came from without actually providing the proof of transaction, written contract, etc. just like my illustration with the bank staff and my goldfish. For this, though, you'll then intersect with and have to answer
LoyceV's question above. And if I may jump in and broaden the hypothetical scenario, the fund is actually came from harmful source and will actually be used for terrorism funding. Is simply saying someone got it from p2p board enough?
Formally, we must act in accordance with FATF (probably it is not necessary to explain that this involves the introduction of KYC for most exchanges), however, we want to provide our users with greater convenience of using our service without taking away the anonymity of exchanges, for this reason we chose the way of requesting data only in exceptional cases, such as the explicit presence of evidence that the funds were obtained by criminal means. In particular, we also feel morally obliged to help the victims who turn to us, as well as our partners. The frozen funds are returned to the victims from whom the funds were stolen.
Requesting information about the source of funds is also practiced on all major exchanges, even on those where KYC has already been passed, if information is received that the funds were obtained by criminal means.
Each case of data request is different. In the vast majority of cases, the provision of data is possible without any deanonymization. If the funds were received by the user from an obvious criminal, then in this case, of course, we will need all the data that can help law enforcement agencies identify the criminal.