Category Archives: Legal Issues and Regulation

[Brookings Institution Event Dec 5]: How to build guardrails for facial recognition technology

Brookings Institution | Dec 4, 2019

facial recognition - [Brookings Institution Event Dec 5]:  How to build guardrails for facial recognition technologyFacial recognition technology has raised many questions about privacy, surveillance, and bias. Algorithms can identify faces but do so in ways that threaten privacy and introduce biases. Already, several cities have called for limits on the use of facial recognition by local law enforcement officials. Now, a bipartisan bill introduced in the Senate proposes new guardrails for the use of facial recognition technology by federal law enforcement agencies.

See:  Smart Cities Offer Promises and Concerns Over Privacy

On Thursday, December 5, the Center for Technology Innovation at Brookings will feature Senators Chris Coons (D-Del.) and Mike Lee (R-Utah), who introduced the bipartisan Facial Recognition Technology Warrant Act this past November. The discussion will focus on how placing procedural safeguards on facial recognition technology, such as requiring warrants and limiting the duration of surveillance, can alleviate concerns over security and privacy while encouraging innovation.

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Brookings Institution

Falk Auditorium

1775 Massachusetts Avenue N.W.

Washington, DC

20036

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NCFA Jan 2018 resize - [Brookings Institution Event Dec 5]:  How to build guardrails for facial recognition technology The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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The UK Provides Legal Certainty For Smart Contracts And Cryptoassets In Its Landmark Legal Statement

Clyde & Co | Karen Boto | Nov 26, 2019

legal statement crypto and smart contracts - [Brookings Institution Event Dec 5]:  How to build guardrails for facial recognition technologyEarlier this week the UK Jurisdiction Taskforce (UKJT), part of the LawTech Delivery Panel of senior solicitors and barristers headed by Chancellor of the High Court, Sir Geoffrey Vos, published a landmark "Legal Statement" providing long awaited clarity as to how cryptocurrencies, distributed ledger technology (DLT) and smart contracts might be treated under English law.

The statement follows several rounds of public and private consultation, conducted to address the perceived legal uncertainties of these innovative technologies.

For the first time, the Panel has recognised that cryptoassets, including but not limited to, digital currencies, can be treated as property in principle, and that smart contracts are capable of satisfying the requirements of contracts in English law, making them enforceable by the Courts.

Highlights Below - What is a cryptoasset?

In summary, the Panel explains that a cryptoasset is defined by reference to the rules of the system within which it exists. It is typically represented by a pair of data parameters: one public (disclosed to all participants in the system) and one private. The public parameter contains encoded information about the asset, such as its ownership, value and transaction history. The private parameter (the private key) permits transfers or other dealings in the cryptoasset to be cryptographically authenticated by a digital signature. The private key should be kept secret to the holder.

See:  IIROC Announces Crypto-Asset Working Group Members

Dealings in cryptoassets are broadcast to the entire network and, once they are validated, they are added to the digital ledger. Most commonly the ledger is decentralised meaning no one person or entity has control over it. It is also immutable and cannot be changed. The most common type of ledger being used today is blockchain, although other models do exist. The rules governing the system are established by the informal consensus of the participants.

The novel features of cryptoassets are therefore broadly summarised as follows:

  • intangibility;
  • cryptographic authentication;
  • use of a distributed transaction ledger;
  • decentralisation; and
  • rule by consensus.

Can cryptoassets be characterised as property?

The Panel has considered what property is, as a matter of English law. As no general or comprehensive definition of property exists in statute or case law, the Legal Statement focusses upon the necessary characteristics of property as identified in a number of authorities. The Legal Statement provides that before a right or interest can be admitted into the category of property: "it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability. Certainty, exclusivity, control and assignability have also been identified in case law as characteristic of property rights."

See:  Coinshares Reveals Top 10 Crypto Trends in 2019

Although whether English law would treat a particular cryptoasset as property will be fact sensitive and require a consideration of the nature of the asset concerned, and the rules of the system in which it exists, in general, the Panel concluded that "cryptoassets have all of the indicia of property."

The Panel also concluded that the "novel or distinctive features possessed by some crypto-assets" set out above, did not "disqualify them from being property.....nor are cryptoassets disqualified from being property as pure information, or because they might not be classifiable either as things in possession or as things in action."

Why does it really matter if a cryptoasset is property?

It is important to determine whether a cryptoasset is capable of being property because it means that it can be owned, which gives rise to important proprietary rights that can be recognised against the whole world. The owner of a thing is entitled to control and enjoy it to the exclusion of anyone else.  Proprietary rights are of particular importance when it comes to issues relating to succession on death, the vesting of property in personal bankruptcy, and the rights of liquidators in corporate insolvency, as well as in cases of fraud, theft or breach of trust.

So, what is the asset and who owns it and how is it transferred?

The Legal Statement confirms that whilst cryptoassets can be transferred either via an "on chain" transfer (with the ledger being updated in the usual way) or by way of an "off chain transfer" (another type of transfer outside the ledger which is vulnerable to a superseding on-chain transfer i.e. double spending by the transferee)) these will not constitute transfers in the legal sense. This is because of the way the distributed ledger technology operates: unlike a tangible asset, the same cryptoasset does not pass, unchanged, from one person to another. Instead, the transferor typically creates a new cryptoasset, with a new pair of data parameters: a new or modified public parameter and a new private key. The data representing the "old" cryptoasset persists in the network, but it ceases to have any value or function because the cryptoasset is treated by the consensus as spent or cancelled so that any further dealings in it would be rejected.

See:  Singapore Poised to Allow Crypto Derivatives on Approved Venues

What consequences does this classification have?

The Legal Statement concludes that it is possible to declare a trust over an ownership interest in a cryptoasset.

However, as the Panel found that a cryptoasset is not a physical thing, it cannot be subject to a possessory relationship, such as a bailment, a lien or a pledge. That said, the Panel expressly states that it could see no obstacle to the granting of other types of security such as charge or mortgage.

It is also clear that cryptoassets are not documents of title, documentary intangibles or negotiable instruments (though some form of negotiability may arise in future as a result of market custom), nor are they instruments under the Bills of Exchange Act.

Nevertheless, as the Panel was of the view that cryptoassets can be property at common law they were in no doubt that they may therefore also be property for the purposes of the Insolvency Act 1986 (IA 1986) which contains a very wide definition of property. Indeed, even if a cryptoasset was deemed not to be property at common law, it might still be deemed to be property under the IA 1986.

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Download the 64pg PDF Report:  Legal Statement on Cryptocurrencies and Smart Contracts -> Now

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NCFA Jan 2018 resize - [Brookings Institution Event Dec 5]:  How to build guardrails for facial recognition technology The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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The 5 Debates That Will Shape Fintech In The 2020s

Forbes | Ron Shevlin | Dec 2, 2019

digital debates - [Brookings Institution Event Dec 5]:  How to build guardrails for facial recognition technology

OBSERVATIONS FROM THE FINTECH SNARK TANK

It’s that time of the year when banking industry pundits turn their thoughts to the top trends of the upcoming year. I’d like to take a different tact and posit the top debates the industry will wrestle with in the coming decade.

It’s that time of the year when banking industry pundits turn their thoughts to the top trends of the upcoming year. I’d like to take a different tact and posit the top debates the industry will wrestle with in the coming decade.

1) Branches: Dead or alive?

The branch debate is certainly not new. But it’s far from resolved, and will accelerate in the next few years. To date, the debate has centered on arguments from:

  1. Branchophiles who point to statistics that show that some high percentage of consumers still go to branches. For example, a CNN article reported that “banks should think twice before they shut down their next bank branch: Many customers, especially younger ones, still regularly rely on physical banks to make deposits, get paper money and even pay bills.”
  2. Branchophobes (like myself) who argue that while consumers might still want the “human touch,” that touch doesn’t necessarily have to come from someone sitting in a building called a bank branch. Why can’t banks use Facetime to facilitate interactions between people? Or why can’t they improve digital processes so consumers don’t need human intervention?

Over the next few years, this debate will focus less on consumer behaviors and preferences and more on the potentially disparate economic impact of branch closings.

Make no mistake: This debate will continue to be politically-infused with anti-bankers accusing banks of intentionally taking harmful actions against segments of the population.

See:  Google is getting into banking with the search giant set to offer checking accounts next year

The NCRC report, for example, points out that “the loss of branch banking access impedes small business lending, hampering capital availability to the primary engine of US economic growth.”

This ignores two facts: 1) The capital gap was created by banks’ increased aversion to risk, not branch closings, and 2) The gap has been closed by fintech startups—who don’t have branches.

Potential implication: Digital banks (and other types of fintech providers) will be required to have a physical presence in economically disadvantaged areas, which will impede their cost advantages.

Bottom line: This decade-old debate will continue into the 2020s, but will be the first of the big debates to be decided as technology-driven approaches to banking become even more dominant—and operationally better.

2) Data: Will privacy and security concerns curtail the use of data?

Picking up where the AI debate leaves off, the debate over the use of consumer data will rage on throughout the 2020s with no easy answers.

On one side of the debate are Dataphiles who argue that data can be used to personalize products, services, and advice that deliver benefits to consumers.

On the other side are Dataphobes like Karen Yeung, a University of Birmingham professor who writes, in Five Fears About Mass Predictive Personalization in an Age of Surveillance Capitalism, that:

"Personalization fosters the asymmetry of power between profilers and individuals. Because preferences and interests are not explicitly stated, personalization may not be in the interests of the customer. Predictive profiling systems intentionally seek to exploit the systematic tendency of individuals to rely on cognitive heuristics or mental short-cuts in making decisions.”

Giving consumers choices over who gets to use their data and how its used will prove to be fruitless. As a Brookings Institution research study reported:

“Maybe informed consent was practical two decades ago, but it is a fantasy today. In a constant stream of online interactions, it is unrealistic to read through privacy policies. And people simply don’t.”

It’s not just privacy policies that fall short—proposed “dashboards” to give consumers control over their data can’t come anywhere close to the level of complexity involved with the use of consumer data.

See: 

Enabling consumers to sell their data isn’t a panacea. Proponents argue that “if consumers could sell their data, they would have the ability to share the data from any transaction with multiple organizations—to their own benefit and that of society as a whole.”

Unfortunately, this perspective ignores the fact that most consumers can’t foresee the way the data they sell could be used. According to the Brookings Institution, “Consumers are unlikely to strike a good deal for their data since they lack information about its value, and the data collectors will be the market makers.”

Bottom line: The debate over the use of data will become highly complex in the 2020s. Big Tech firms are already in the spotlight for their use of data—that light will spread to the companies who partner with them.

3) China or the West: Which fintech model will prevail?

SWIFT reports:

“China and the West are at different stages of fintech maturity. China’s fintech success derives not just from a technological advantage and unprecedented innovation, but also from integrating finance and real-life needs.”

The integration of “finance and real-life needs” has produced “super apps” like WeChat, which have yet to catch on in the US. The big question is: Will they?

The answer will likely be determined by how the other debates outlined in this article play out. Unknowns in this debate include:

  • Will the US continue to move towards socialistic economic approaches that help favor a super app environment?
  • Will the US develop and adopt a national AI policy to become more competitive (and, in fact, does it even need to)?
  • Will the US regulatory environment (e.g., antitrust laws) change to favor a super app approach?
  • Could a Chinese-like Social Credit System take hold in the US?

See: 

The virtue of a social credit system is a debate unto itself that could dictate the fintech implications. A study titled A Dystopian Future? The Rise of Social Credit Systems presents two sides of the argument:

  • One side argues that “a Social Credit System can’t be rightfully designated as civic virtues because: (1) a score constitutes an aim external to any ‘virtuous action’, and (2) the resulting activity tends to conformity rather than to distinction in the public sphere.”
  • The other side sees it as a “promising way to enhance distributive justice and an alternative for price mechanisms in market economies.”

The stakes of this debate transcends the success or failure of individual companies. As Richard Turrin writes:

“For the first time, fintech is being used by countries to compete with one another on a global stage. Fintech is being deployed as a tool for governments to project their power abroad, and potentially disrupt established systems.”

Bottom line: This is the mother of all debates among the five listed here. This debate goes to the heart of the American economic system and the zeitgeist of the American psyche.

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NCFA Jan 2018 resize - [Brookings Institution Event Dec 5]:  How to build guardrails for facial recognition technology The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Fintech Canada Directory Category: Security | Identity | Regtech

 

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NCFA Jan 2018 resize - Fintech Canada Directory Category:  Security | Identity | Regtech The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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HK’s SFC Finalises New Regulatory Framework For Virtual Asset Trading Platforms

Herbert Smith Freehills | William Hallatt and co-authors | Nov 22, 2019

digital and virtual - [Brookings Institution Event Dec 5]:  How to build guardrails for facial recognition technologyOn 6 November 2019, Hong Kong's Security and Futures Commission (SFC) issued a position paper setting out a new regulatory framework for the licensing of centralised virtual asset trading platforms, following the SFC's conceptual framework issued last year.

The SFC's CEO, Ashley Alder, made clear in his speech at Hong Kong FinTech Week that the new framework is intended to be "principles-based and technology neutral", applying consistent principles of investor protection in order to encourage "FinTech to flourish in a way that promotes a high level of confidence in all who participate". The new framework is comparable to the regulatory standards for licensed security brokers and automated trading venues, adapted to deal specifically with the technology on which the virtual asset trading platform industry is based.

Platforms which "opt-in" to the new framework will no doubt benefit from the clear competitive advantage a SFC licence represents, acting as an indicator to the market and investors that the operator is willing to adhere to a high level of standards and practices.

See:  Recession gatecrashes Hong Kong’s fintech party | SFC outlines VATP regulatory framework and China’s digital currency

However, as discussed in this bulletin, the new regulatory framework which is created within the current legislative framework has a number of limitations. It also does not apply to virtual assets which are futures contracts and the SFC said that it is unlikely to issue licences to carry on a business in such contracts, given the SFC considers them to be extremely risky. The SFC has indicated it will continue to monitor the virtual asset market and explore the need for legislative changes in the longer term.

Global landscape and the SFC's regulatory approach

Together with other regulators, the SFC has taken note of the exponential growth of virtual assets (also known as cryptocurrencies, crypto-assets and digital tokens). Globally, there are now around 3,000 digital tokens and 200 virtual asset trading platforms. Notwithstanding a period of erratic volatility in 2019, the virtual asset market looks unlikely to substantially diminish.

With the entrance of greater numbers of traditional financial institutions and service providers, the virtual asset ecosystem has steadily grown and become more sophisticated in providing services comparable to traditional mainstream finance.
In Hong Kong, the SFC is principally mandated to regulate "securities" and "futures contracts". Where virtual assets fall within the scope of these definitions, they are likely to fall within the SFC's jurisdiction. However, many virtual assets, including Bitcoin, do not fall within the scope of these definitions and are likely not within the SFC's regulatory remit.

In light of this gap, the SFC has taken steps to bring some virtual asset activities into its regulatory net. In November 2018, it published a statement setting out regulations for virtual asset fund managers and fund distributors and a conceptual framework for virtual asset trading platforms. Earlier this year, it published licensing conditions for certain virtual asset fund managers.

See:  UK Financial Conduct Authority Provides Final Guidance on Cryptoassets: Better Defines Utility Tokens

In the new position paper, the SFC said it remains concerned about investor protection in the virtual asset platform industry. In particular, it cited reports of platforms being hacked, with investors suffering substantial losses. It said trading rules may not be transparent and fair, and crypto markets are vulnerable to manipulation. In addition, the anonymity and other technical features of blockchain-based virtual assets are of concern from an anti-money laundering (AML) and counter-financing of terrorism (CFT) perspective.

The new regulatory framework

The SFC's new regulatory framework covers various key investor protection concerns, including the safe custody of assets, know-your client (KYC) requirements, AML/CFT and market manipulation.

The framework is essentially an "opt-in" licensing system, offering a route to licensing only for those "centralised platforms" in Hong Kong which offer trading of at least one virtual asset which is a security token. "Centralised platforms" are platforms that provide trading, clearing and settlement services, and have control over investors' assets.

Where the framework applies to a platform, it covers all platform operations, even if the majority of virtual assets traded are not securities. For example, when considering whether a licence applicant is fit and proper to be granted (and to continue to hold) an SFC licence, the SFC will take into account the manner in which the applicant conducts its entire virtual asset trading business, as this may impact upon its fitness and properness to undertake regulated activities. This includes whether the platform follows (or is willing and able to follow) expected regulatory standards, whether this involves security or non-security virtual assets and whether occurring on or off its platform.

See:  All You Need to Know About China’s Latest Crypto Crackdown

Licenced platforms will be subject to licensing conditions to address specific risks associated with their operations. These may include a restriction that platform services can only be provided to professional investors who can demonstrate that they have sufficient knowledge of investing in this area. Platforms may also be required to obtain the SFC's prior written approval for any plan or proposal to add products to their platforms.

Licenced platforms will also be subject to an initial period of close and intensive supervision in the SFC Regulatory Sandbox, entailing more frequent reporting, monitoring and reviews.

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NCFA Jan 2018 resize - [Brookings Institution Event Dec 5]:  How to build guardrails for facial recognition technology The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Fintrac releases key updates to AML obligations, including virtual currency exchange MSB registration

CFCS | Brian Monroe | Nov 22, 2019

altcoins - [Brookings Institution Event Dec 5]:  How to build guardrails for facial recognition technologyFintrac releases key updates to AML obligations, including virtual currency exchange MSB registration, details tactics to verify individual, corporate identities  

Canada’s Financial Transactions and Reports Analysis Centre (Fintrac), the country’s financial intelligence unit (FIU), has released a bevy of critical updates tied to anti-money laundering (AML) obligations, including opening the door for virtual currency exchanges to register as money services businesses for compliance purposes and offering more clarification on how to verify individual and corporate identities.

Fintrac, cognizant that countries, including Canada, are under more pressure to uncover and detail the beneficial owners of corporations, is bolstering a critical precursor for such initiatives: ensuring that the documentation tied to corporates, individuals and other entities is ironclad and can form the foundation of strong customer due diligence, risk assessments and be reliable in related AML investigations.

Here is a look at some of those updates:

MSBs in Canada acting as virtual currency exchanges must register and can do so now

See:  Canada Seeks to Widen AML Compliance Net

MSBs that deal in virtual currency can now voluntarily register with Fintrac in advance of June 1, 2020, when registration will be mandatory, according to a notice on the regulator’s site.

In short, the requirements mirror similar efforts by U.S. regulators, where a virtual currency exchange is considered an MSB and, correspondingly, MSBs are subject to a host of AML rules. Fintrac notes that crypto exchanges, and those engaged in P2P exchanges on behalf of others, are captured by the rules, even if the transactions are involving only virtual values.

AML rules, and related Fintrac and MSB registration duties, get tripped for both virtual currency exchange and virtual currency transfer services, in several scenarios, including:

1. Virtual currency exchange services include exchanging:

  • o funds for virtual currency,
  • o virtual currency for funds or,
  • o virtual currency for another virtual currency.

2. Virtual currency transfer services include:

  • o transferring virtual currency at the request of a client or,
  • o receiving a transfer of virtual currency for remittance to a beneficiary.

To read more about the upcoming virtual currency registration deadline, or to get a better sense of what Fintrac considers an MSB, click here.

Identity verification 

Methods to verify the identity of an individual and confirm the existence of a corporation or an entity other than a corporation

Fintrac also released guidance on how best to review and verify documents, details and data to properly confirm the identify of individuals and corporates to the depth required by Canada’s AML rules.

Though this may seem a rote, rudimentary task at first blush, the quality and accuracy of data is considered the lifeblood of the financial crime compliance program and customer information in particular is considered a powerful foundation for related risk assessments, which in turn, tune bank transaction monitoring systems to alert and lead to producing suspicious activity reports (SARS).

See:  Cyberattacks now cost small companies $200,000 on average, putting many out of business

Fintrac covers key nuances to identify verification, including using digital documentation, how and when institutions can rely on identification captured by affiliates and agents and taking a hybrid approach by combining several weaker forms of identification to reach a threshold that meets regulatory expectations while not running afoul of privacy rules.

This document answers the following questions:

  • 1. What does it mean to verify the identity of an individual or to confirm the existence of a corporation or of an entity other than a corporation?
  • 2. How do I verify the identity of an individual?
  • 3. How do I use an affiliate, agent, or mandatary?
  • 4. How do I identify a child?
  • 5. How do I confirm the existence of a corporation or of an entity other than a corporation?
  • 6. Are there restrictions on the use of personal information?

Some key snapshots include ways to verify the identity of individuals and corporations.

For individuals:

  • A government-issued photo identification document must be issued by either a federal, provincial or territorial government in order to be used to verify the identity of an individual.
  • You may accept a foreign government-issued photo identification document if it is an equivalent to a Canadian document such as those listed in this guidance.
  • Photo identification documents issued by municipal governments, Canadian or foreign, are not acceptable.

See:  Cybercrime FinTech, Flare Systems, Raises $1M, Led by Luge Capital

For corporations:

  • its certificate of incorporation;
  • a certificate of active corporate status;
  • a record that has to be filed annually under provincial securities legislation; or
  • any other record that confirms the corporation’s existence, such as the corporation’s published annual report signed by an audit firm, or a letter or notice of assessment for the corporation from a municipal, provincial, territorial or federal government.

To read the full Fintrac report on identity verification, click here.

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NCFA Jan 2018 resize - [Brookings Institution Event Dec 5]:  How to build guardrails for facial recognition technology The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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All You Need to Know About China’s Latest Crypto Crackdown

Bloomberg News  | Zheping Huang and Olga Kharif | Nov 27, 2019

Crypto china - [Brookings Institution Event Dec 5]:  How to build guardrails for facial recognition technology(Bloomberg) -- China’s latest crypto-crackdown is already claiming its first casualties.

At least five local exchanges have halted operations or announced they will no longer serve domestic users this month, after regulators issued a series of warnings and notices as part of a cleanup of digital currency trading.

China’s stepping up scrutiny of its massive cryptocurrency industry just weeks after President Xi Jinping ignited a market frenzy by declaring Beijing’s support for blockchain technology. Financial watchdogs including the Chinese central bank have in past weeks ordered crypto firms to shutter and warned investors to be wary of digital currencies, seeking to rein in a market prone to excesses. Weibo, a Chinese Twitter suspended accounts operated by major exchange Binance Holdings Ltd. and blockchain platform Tron.

See:  News on China cryptocurrency and more reforms

Taken together, the latest wave of shutdowns and restrictions represent the biggest cleanup of the sector since an initial Chinese clampdown in September 2017. Although exchanges that allow users to buy Bitcoin and Ether with fiat money were banned, trading had remained rampant in China through over-the-counter platforms or services that deal with crypto assets only.

“It appears that, like everything else within their borders, China feels it needs to have tighter controls on the crypto market including exchanges, miners and asset issuers,”

said Katie Talati, head of research at Arca, a Los Angeles-based asset manager that invests in cryptocurrencies.

“I do believe, however, they are moving in a similar direction as Japan and other jurisdictions that have tight and clear regulations for crypto businesses.”

“The current situation and environment for blockchain in China is still very positive,” Tron founder and crypto entrepreneur Justin Sun said. “In the short term, it may not get as much progress as we’d expect.”

See:  Why China is Winning at Blockchain

Here’s a timeline of the recent developments from China that’s been blamed for the plunge:

  • On Nov. 13, Binance’s Weibo account was suspended.
  • On Nov. 14, the Chinese central bank’s Shanghai office and the city’s financial regulator issued a notice asking local government agencies to work with crypto-related companies under their supervision to exit such businesses immediately. On the same day, Beijing’s financial regulator published a statement warning against illegal exchange operations.
  • On Nov. 15, Tron’s Weibo account was frozen.
  • On Nov. 21, Shenzhen financial regulator said in a statement it’s looking into allegedly illegal crypto operations, organizing check-ups and gathering evidence.
  • On Nov. 21, crypto publication the Block reported Binance’s Shanghai office was shut in a police raid. Binance disputed the report, or that it has fixed offices in China.
  • On Nov. 22, the Chinese central bank’s Shanghai branch said in a statement that companies that have conducted publicity campaigns, or have offered other services to offshore crypto exchanges, have been ordered to take immediate corrective actions or exit the business.

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