It is not that the stupidity of the Know Your Customer (KYC) and Anti Money Laundering (AML ) procedure, is a stable thing. No, as expected, its stupidity keeps growing!

The first and oldest problem is of course that nobody can prevent other people from using photoshop in order to create a forged image of a passport and a utility bill. There is worse than that, however. Any system containing a database of KYC/AML images is prime target for attack. Most of the images in such database are real and have successfully been accepted as proof of identity and proof of address. The attacker can happily use them to open financial accounts with elsewhere.

So, now, with all the stolen identities floating on the internet, they understandably no longer trust a passport scan. Today, anxbtc.com sent me the following request:

Can you also provide us with an image of yourself holding your valid government issued photo ID?

Unfortunately, their strategy will not solve the problem either. It is just more of the same. Instead of just sitting on a database of passport scans, they will also be sitting on an additional database of users holding their passports in their hands. So, instead of just stealing passport scans, the attackers will now be stealing these new scans as well.

There is a similar problem with credit cards. All these databases stuffed with credit card numbers sitting on the internet are just accidents waiting to happen.

You see, bitcoin itself is protected by methods of advanced cryptography. The security that this provides, cannot be matched by using methods of advanced bureaucracy. Paperwork forms, and scanned images of those, can simply not do what mathematics can do. When that kind of images circulate on the internet, they quickly have the opposite effect as intended. When credit card numbers circulate on the internet, they will sooner or later become counterproductive too.

The regulators do not understand that. Instead of urgently rolling out a cryptographical method to achieve KYC/AML — if their goal is actually achievable at all — they forcibly shut down bitcoin exchanges if these exchanges do not implement their utterly stupid and self-defeating KYC/AML paper-based procedures. These regulators are violent, insist on imposing their stupidity onto others, and systematically jeopardize the security of the population.These regulators are truly violent idiots.