Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/289009 
Year of Publication: 
2020
Citation: 
[Journal:] Business & Information Systems Engineering [ISSN:] 1867-0202 [Volume:] 63 [Issue:] 5 [Publisher:] Springer Fachmedien Wiesbaden [Place:] Wiesbaden [Year:] 2020 [Pages:] 551-567
Publisher: 
Springer Fachmedien Wiesbaden, Wiesbaden
Abstract: 
Blockchain technology is often proposed as an infrastructure for decentralized Know-Your-Customer (KYC) verification, i.e., a process determining whether a customer is eligible for a given transaction. The benefit of using blockchain technology lies in the expected compliance costs reduction for companies by automatically enforcing KYC-requirements, whose results are accessible by multiple financial institutions. While information systems researchers have proposed conceptual models and prototypes of blockchain-based KYC-systems, they do not yet consider severe penalties that are applicable to companies if KYC-requirements are not met. Hence, if the legal requirements for KYC-processes cannot be met, these systems are not applicable. The paper uses an objective-centered design science research approach to develop a blockchain-based KYC-system for the conduct of ICOs that is compliant-by-design. To this end, the authors first identify existing KYC-requirements and define corresponding system design objectives that are used to develop a KYC-system that automatically enforces KYC-regulations, thereby preventing money laundering and other forms of identity fraud. Second, the authors contribute to the literature by providing a blueprint for compliant-by-design blockchain-based KYC-systems, in the paper, integrated into the investment flow of an ICO. Third, the authors propose a KYC-system that is applicable in the real world, by making – due to legal certainty – KYC-processes cost-effective, i.e., the proposed blockchain-based KYC-system expectably reduces compliance costs for customers and financial organizations.
Subjects: 
Blockchain
Distributed ledger
Know-your-customer
Anti-money-laundering
Initial coin offering
Compliance-by-design
Design science research
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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