This document discusses the Know-your-customer (KYC) processes supported by Taler.
To legally operate, Taler has to comply with KYC regulation that requires banks to identify parties involved in transactions at certain points.
Taler needs to run KYC checks in the following circumstances:
We introduce a new wire_targets table into the exchange database. This
table is referenced as the source or destination of payments (regular deposits
and also P2P payments). A positive side-effect is that we reduce duplication
in the reserves_in, wire_out and deposits tables as they can
reference this table. In this table, we additionally store information
related to the KYC status of the underlying payto://-URI.
The new /kyc-check/ endpoint is based on the wire_targets serial
number. Access is authenticated by also passing the hash of the
payto://-URI (weak authentication is acceptable, as the KYC status or the
ability to initiate a KYC process are not very sensitive). Given this pair,
the /kyc-check/ endpoint returns either the (positive) KYC status or
redirects the client (202) to the current stage of the KYC process. (The
endpoint may have to create and store a nonce to be used during
/kyc-proof/, depending on the OAuth variant used.) The redirection is
offered using an HTTP-redirect for Web-based clients and a JSON body with
information for triggering a browser-based KYC process using OAuth 2.0.
The OAuth 2.0 process is setup to end at a new /kyc-proof/ endpoint. This
endpoint then updates the KYC table of the exchange with the legitimization
status (which is checked using OAuth 2.0). The endpoint also wakes up any
long-polling /kyc-check/ requests. Naturally, the exchange’s OAuth 2.0
client credentials must be configured apriori with the legitimization service.
When withdrawing, the exchange checks if the KYC status is acceptable. If no
KYC was done and if either the amount withdrawn over the last X days exceeds
the threshold or the reserve received received a P2P transfer, then a 202
Accepted is returned which redirects the consumer to the new /kyc-check/
handler.
When depositing, the exchange checks the KYC status and if negative, returns an
additional information field that tells the merchant the wire_target_serial
number needed to begin the KYC process (this is independent of the amount)
at the new /kyc-check/ handler.
When tracking deposits, the exchange also adds the wire_target_serial to
the reply if the KYC status is negative.
The aggregator is modified to only SELECT deposits where the wire_target
has the KYC status set to positive (unless KYC is disabled in the exchange
configuration).
To allow the wallet to do the KYC check if it is about to exceed a set balance
threshold, we modify the /keys response to add an optional field
wallet_balance_limit_without_kyc the wallet is allowed to hold in coins
from this exchange without KYC. If this field is absent, there is no limit.
If the field is provided, a correct wallet must create a long-term
account-reserve key pair. This should be the same key that is also used to
receive wallet-to-wallet payments. Then, before a wallet performs an operation
that would cause it to exceed the balance threshold in terms of funds held
from a particular exchange, it must first request the user to complete the KYC
process.
For that, it should POST to the new /wallet-kyc endpoint, providing its
long-term reserve-account public key and a signature requesting permission to
exceed the account limit. The exchange will respond with a wire target
UUID. The wallet can then use this UUID to being the KYC process at
/kyc-check/. The wallet must only proceed to obtain funds exceeding the
threshold after the KYC process has concluded. While wallets could be “hacked”
to bypass this measure (we cannot cryptographically enforce this), such
modifications are a terms of service violation which may have legal
consequences for the user.
..note:
Unrelated: We may want to consider directly deleting prewire records instead of setting them to ``finished`` in ``taler-exchange-transfer``.
Note that there is may be some slight complication in the migration as the h_wire in deposits is salted, while the h_payto in the new wire_targets is expected to be unsalted. So converting the existing information to create the wire_targets table will be tricky!
We can either not support a fully automatic migration, or do an “expensive” migration with C logic (so not just SQL statements).
Given the other database changes for protocol v9, it was decided to just not support any migration this time.
-- Everything in one big transaction
BEGIN;
-- Check patch versioning is in place.
SELECT _v.register_patch('exchange-TBD', NULL, NULL);
--
CREATE TABLE IF NOT EXISTS wire_targets
(wire_target_serial_id BIGSERIAL UNIQUE
,h_payto BYTEA NOT NULL CHECK (LENGTH(h_payto)=64),
,payto_uri STRING NOT NULL
,kyc_ok BOOLEAN NOT NULL DEFAULT (false)
,oauth_username STRING NOT NULL
,PRIMARY KEY (h_wire)
);
COMMENT ON TABLE wire_targets
IS 'All recipients of money via the exchange';
COMMENT ON COLUMN wire_targets.payto_uri
IS 'Can be a regular bank account, or also be a URI identifying a reserve-account (for P2P payments)';
COMMENT ON COLUMN wire_targets.h_payto
IS 'Unsalted hash of payto_uri';
COMMENT ON COLUMN wire_targets.kyc_ok
IS 'true if the KYC check was passed successfully';
COMMENT ON COLUMN wire_targets.oauth_username
IS 'Name of the user that was used for OAuth 2.0-based legitimization';
--
-- NOTE: logic to fill wire_target missing, so this
-- CANNOT work if the database contains any data!
--
ALTER TABLE wire_out
ADD COLUMN wire_target_serial_id INT8 NOT NULL REFERENCES wire_targets (wire_target_serial_id),
DROP COLUMN wire_target;
COMMENT ON COLUMN wire_out.wire_target_serial_id
IS 'Identifies the target bank account and KYC status';
--
ALTER TABLE reserves_in
ADD COLUMN wire_source_serial_id INT8 NOT NULL REFERENCES wire_targets (wire_target_serial_id),
DROP COLUMN sender_account_details;
COMMENT ON COLUMN wire_out.wire_target_serial_id
IS 'Identifies the target bank account and KYC status';
--
ALTER TABLE reserves_close
ADD COLUMN wire_source_serial_id INT8 NOT NULL REFERENCES wire_targets (wire_target_serial_id),
DROP COLUMN receiver_account;
COMMENT ON COLUMN reserves_close.wire_target_serial_id
IS 'Identifies the target bank account and KYC status. Note that closing does not depend on KYC.';
--
ALTER TABLE deposits
ADD COLUMN wire_target_serial_id INT8 NOT NULL,
ADD COLUMN salt BYTEA NOT NULL CHECK (LENGTH(salt)=64),
DROP COLUMN h_wire,
DROP COLUMN wire;
COMMENT ON COLUMN deposits.wire_target_serial_id
IS 'Identifies the target bank account and KYC status';
-- Complete transaction
--
-- FIXME: 512-bit SALT is likely not specified/checked
-- anywhere in the code (salt==string), and we probably
-- should move to a 128-bit salt anyway!
--
COMMIT;
We introduce new kyc_status, kyc_timestamp and kyc_serial fields
into a new table with primary keys exchange_url and account. This
status is updated whenever a deposit is created or tracked, or whenever the
mechant backend receives a /kyc-check/ response from the exchange. Initially,
kyc_serial is zero, indicating that the merchant has not yet made any
deposits and thus does not have an account at the exchange.
A new private endpoint /kyc is introduced which allows frontends to
request the /kyc status of any configured account (including with long
polling). If the KYC status is negative or the kyc_timestamp not recent
(say older than one month), the merchant backend will re-check the KYC status
at the exchange (and update its cached status). The endpoint then returns
either that the KYC is OK, or information (same as from the exchange endpoint)
to begin the KYC process.
The merchant backend uses the new field to remember that a KYC is pending
(after /deposit, or tracing deposits) and the SPA then shows a
notification whenever the staff is logged in to the system. The notification
can be hidden for the current day (remembered in local storage).
The notification links to a (new) KYC status page. When opened, the KYC status
page first re-checks the KYC status with the exchange. If the KYC is still
unfinished, that page contains another link to begin the KYC process
(redirecting to the OAuth 2.0 login page of the legitimization resource
server), otherwise it shows that the KYC process is done. If the KYC is
unfinished, the SPA should use long-polling on the KYC status on this page to
ensure it is always up-to-date, and change to KYC satisfied should the
long-poller return with positive news.
..note:
Semi-related: The TMH_setup_wire_account() is changed to use 128-bit salt values (to keep ``deposits`` table small) and checks for salt to be well-formed should be added "everywhere".
The exchange primarily requires an OAuth 2.0 login page where the user can either login (and share an access token that grants access to only the username) or register to initiate the KYC process.
We may not need the oauth_username, but it seems saner to store it to provide a link to the legitimization resource server.
We could also store the access token, but that seems slightly more dangerous and given the close business relationship is unnecessary.
We may want to store some additional “permission level” obtained from the resource server to say for which of the operations (see requirements section) the legitimization is sufficient.
(This should be filled in with results from discussions on mailing lists / personal communication.)