In a few months, Crowdestate will be five years old and our investor community includes almost 24,000 international investors. We have managed to keep our sign-up processes short and simple, and we have based our current investor identification process on the information provided by investor himself as well as on the data collected during funds transfer transactions.
Since Monday, we are asking our investors to pass through an additional quick identity verification process, that takes just a few minutes and requires the use of any internet connected device equipped with a camera (laptop, tablet, smartphone etc). User portrait and documentation snapshots are taken during the process and those snapshots are used to verify the investor’s identity according to current legislative requirements.
The need for additional verification might raise questions like “Why do we need it?” and “Why do we need to implement it today?” – if we managed to cope with it before, why can’t we continue as before?
There are two major reasons for introducing our new investor identity verification process.
Need to be compliant with current and upcoming regulation.
While crowdfunding has been around for a while, it is still somewhat gray and unregulated area in most EU countries and the future rules are still work in progress. Several crowdfunding platforms (including Crowdestate) are operating segregated “client accounts” to keep track of their investor’s funds and to facilitate money transfers from and to investors, and such “client account” might be qualified and payment services and fall under the jurisdiction of current European Payment Services Directive (PSD2), which means the crowdfunding platform’s payment services should be licensed by the Financial Supervision Authority. While the Payment Services Directive is a universal and unified law applicable across the European Union, different countries are interpreting its contents differently. For instance, Estonia has is considering the operations of “client account” to fall under the exemptions of the PSD2 directive and therefore not being subject to payment institution license. At the same time, the southern EU countries require a full payment institution license in case the crowdfunding platform is operating the “client account”.