One unfortunate speed bump and occasional roadblock I encounter when closing deals is the KYC requirements at Escrow.com. Oftentimes, it can be a minor inconvenience to get the other party verified. Sometimes, particularly when dealing with large corporate entities, it becomes impossible and it can complicate a deal at a critical time.
Let’s say I am selling a domain name to Example Company, a multi billion dollar organization that is traded publicly. At closing, I often deal with a senior legal counsel or CTO to paper a deal and close it. With the Escrow.com KYC requirements, not only does Example Company need to be KYC’d, but the individual closing the deal also needs to submit documents. Getting someone who has no vested interest or benefit from a deal to submit personal ID and documents has been problematic.
Something I started doing at the contract stage is sending the person the Escrow.com KYC requirements. This is before we’ve gone back and forth on contract language, including the escrow expectations. The counterparty will know what is necessary to complete escrow with Escrow.com, and if this is going to be an issue, they can request an alternative escrow service. The contract can be modified to include the escrow service before sending the final draft for review.
Here’s what I send the counterparty for them to understand what is needed for KYC at Escrow.com:
Identity Verification
1. Go to “Get Verified” or to Escrow.com/verify
2. Complete identity verification with the submission of a clear, coloured scan of your ID (front and back).
3. If the ID already provides a proof of address, no further documents will be required, so please check”The uploaded file shows my current address”. If it doesn’t, you can submit a clear, coloured scan of a utility bill or bank statement reflecting the name and the address in the Escrow.com profile.
For a better detailed list of acceptable documents you can visit https://www.escrow.com/
If they will get verified as a company, these are the requirements:
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Personal verification approved.
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Copy of Company documentation (registration).
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Letter of authorization. Only if your name or your affiliation to the company is not shown on the documentation or can’t be verified via external check.
Company Verification
1. Go to “Get Verified” or to Escrow.com/verify
2. Change the account type to Company
3. Complete the blank fields
4. Submit a copy of company documentation as proof of registration. A list of acceptable documents according to company type can be found in the following link: https://www.escrow.com/
5. If your name is showing in the document submitted, no further documentation is required. If not, please attach a Letter of Authorization to your submission. Attached is a template should you find it useful. Please make sure the signatory’s name is shown in the Company document submitted.
This can be a real problem. I’ve written about it before. I’ve had legitimate transactions held up for over a month due to all of the back-and-forth, bureaucracy, and confusion over these requirements.
And it’s crazy difficult if one of the buyer or sellers is associated with more than one legal entity (like a domain investment entity and an ecommerce business, with different bank accounts, addresses, and ownership structures) because they can identify the two accounts as duplicates and ask for one of them be closed before the transaction can be completed. This happened to me but thankfully I was able to escalate to a manager and explain why this was not possible and to get a waiver of this policy.
As someone who has had an escrow account hacked and has caught a large fraudulent domain transfer from my account in progress ,and thankfully (due to great help from Escrow.com- the prior incarnation) was able to stop them from occurring, I definitely do understand and appreciate the attempts to lock down these accounts for safety and security. Additional account security is definitely a good thing and it’s very important.
But I think the new requirements go too far, when they are so intrusive and bureaucratic that they can cause legitimate deals to be cancelled or to be delayed unnecessarily.