e-gold Blog

e-gold Value Access Plan – Monetization Preparation

On June 3, 2011, a civil complaint was filed by the Government seeking forfeiture of all value being maintained by e-gold, Ltd. (“EGL”).  In addition, the Government has filed an application with the court requesting the issuance of an arrest warrant in rem seeking to arrest all of the e-metal accounts maintained by EGL.  On June 20, 2011, District Court Judge Ellen N. Hollander issued an arrest warrant in rem requiring EGL to monetize the value of all e-metal accounts maintained at EGL.  The arrest warrant requires Gold & Silver Reserve, Inc (“GSR”) to monetize this value in U.S. Dollars and deliver the proceeds to a Claims Administrator who will deposit the dollars in an interest bearing escrow account in the District of Maryland.

Pursuant to the arrest warrant in rem, GSR has begun the monetization process by coalescing all of the e-metal accounts, resulting in your accounts having a zero balance.  The current balance of your account is reported on the Balance page as the "Current Balance".  The balance of your account immediately before being coalesced in preparation for monetization is reported as the "Final Balance".

Final Balances of a given e-metal will be used to determine each account's proportional share of the monetized value of the circulation of that same e-metal.  For an overview of the e-metal monetization and distribution process, please click here.

e-gold Value Access Plan Overview

The following is an outline of the monetization and distribution process of the value for all e-metal accounts held in EGL accounts (“Value Access Plan” or “VAP”) as agreed to between the Government, e-gold Ltd (“EGL”) and Gold & Silver Reserve, Inc. (“GSR”) .  The agreement identifies three distinct groups of value: Criminal Proceeds Value (“CPV”), VAP Value, and Residual Value and sets forth the process by which each of these values will be monetized and distributed.

Criminal Proceeds Value Accounts

EGL and GSR have advised the Government that they believe EGL has in its possession evidence establishing that certain accounts contain value that is traceable to criminal activity in which third-party e-gold account holders engaged.  Such accounts with a balance of one (1) ounce or more of e-gold are defined as CPV accounts.

Under the terms of the agreement, EGL will provide to the Government a list of names and contact information of the CPV account holders in order to provide those account holders with the requisite notice.  The government must provide notice for at least 30 days as well as direct notice to any person who reasonably appears to be known as a potential claimant for the CPV.

The deadline for filing a claim by a CPV claimant is at least 35 days after notice is sent (actual notice situation) or no later than 60 days after 1st day of 30 days of publication.  Upon judicial resolution of any CPV claims, the Government will request the court to issue an order forfeiting the CPV to the United States.

The value in these accounts will be monetized as required by the arrest warrant in rem, pursuant to the terms and conditions of the agreement with the proceeds being delivered to the Claims Administrator.

Value Access Plan and Set Aside Value

All remaining value in the system will be monetized as required by the arrest warrant in rem, pursuant to the terms and conditions described in the agreement.  The value of this monetization will be the “VAP Set-Aside Value”.   The Claims Administrator will deposit the VAP Set-Aside Value into an interest bearing escrow account.

The Value Access Plan  will be available to all account holders other than those whose accounts contain criminal proceeds.  VAP participants will be able to access the monetized value of their accounts upon satisfactory completion of EGL’s customer due diligence process subject to disqualification by the Government or the Claims Administrator.   The first step for an account holder will be to complete the Customer Identification Program (“CIP”) via the EGL website.  According to the CIP, account holders are required to provide certain identifying information that is required by U.S. anti-money laundering laws to be verified.

The agreement states that EGL will provide notice to account holders of the launch of the VAP and this notice will advise account holders that:

1. all claims must be submitted within 120 days;
2. distributions from the VAP Set-Aside Value attributable to VAP-Qualified accounts will be made to VAP-Qualified Claimants;
3. by agreement with relevant government authorities, all other value of e-metal accounts is subject to forfeiture action pending in the District of Maryland;
4. VAP-Qualified Claimants will be paid a sum of money representing each VAP-Qualified Account’s proportionate share of the monetized value of each applicable e-metal in the system as calculated by EGL;
5. the distribution of that money will be pursuant to court order; and
6. that such distribution will be in full and final settlement of all amounts due in respect of each VAP-Qualified Account.

As noted above, account holders will have 120 days from launch of VAP to file a claim.  Such claim will require, among other things, providing owner and user identification information.  EGL will collect and verify all identifying information provided by any VAP-eligible account holder and will send to the Claims Administrator on a monthly basis a list:

1. identifying VAP-eligible account holders who have submitted the requisite information as verified by EGL;
2. showing the account number(s) from which each such claimant seeks value; and
3. specifying the value in U.S. dollars of each corresponding account based on its proportionate share of the monetized value.

Both the Government and the Claims Administrator will review the list of VAP-eligible, CIP compliant account holders supplied by EGL.  Either the Claims Administrator or the Government may disqualify such claimant on the following grounds:

1. known engagement in criminal activity;
2. activity related to terrorism; or
3. residence in a country (other than Iran) subject to OFAC sanctions that would prohibit the Claims Administrator from paying the claimant.

The Government and Claims Administrator will have 10 business days to notify VAP-eligible claimant of disqualification.  In the absence of such disqualifications, the Government will submit a motion to the court to release funds for distribution to the VAP Qualified Claimants.  The Government will send a copy of these papers (or notice of disqualification) to the claimants and EGL.   The claimants will have 15 days to object to the amount of distribution and, in the case of a disqualified account holder, to such disqualification.

The agreement calls for distributions to VAP-Qualified Claimants in two tranches.  First, each VAP-Qualified Claimant will receive funds equal to 85% of their approved claim. After objections of other VAP-eligible claimants have been resolved, within 15 days of resolving the claims, the Government will move the court to order the release of so much of the VAP Set-Aside Value as necessary to pay all successful VAP claimants their final proportionate share of the monetized value of their account(s).

While this approach will delay full payment to successful account holders, paying in two tranches will enable successful claimants to receive 85% of their claim immediately while ensuring that all successful claimants receive a properly calculated proportionate share of the VAP Set-Aside Value.
 
Distribution of Residual Value

If there is Residual Value remaining after forfeiture of the CPV, distribution of the VAP Value and, resolution of any disputed claims, the Government will provide notice to all potential claimants to the Residual Value following the same notice and claims process used for CPV accounts.  The Government will provide notice for at least 30 days by publication as well as the required actual notice to any person who reasonably appears to be a known potential claimant.  Deadline for filing a claim by Residual Value claimant:

1. at least 35 days after notice is sent (actual notice situation); or
2. no later than 60 days after 1st day of 30 days of publication.

Residual Value claimants will have up to 60 days from first date publication of notice by the DOJ to file their notice of claim.  Upon judicial resolution of any residual value claims and the merits of the forfeiture action against the Residual Value the Government will seek the forfeiture of the Residual Value.

All of these conditions are intended to ensure that qualified claimants, account holders receive the value from their account at the prevailing exchange rates at the time of monetization less reasonable exchange fees.   


Value Access Plan Update

We are pleased to announce that the U.S. Government has taken an important step towards implementing the Value Access Plan (VAP) .  As we announced in our posting dated December 31, 2010,  the VAP will permit owners of VAP-Qualified Accounts to be paid in U.S. dollars their proportionate share of the monetized value of the e-metals in their Accounts.‪ 
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Specifically, we have learned that the Government has nominated a Claims Administrator to oversee the VAP.  The Government is expected to apply for court approval of that nominee soon. Pursuant to our agreement with the Government, once the Claims Administrator is appointed by the court, we can provide our Account holders with notice of the launch of the VAP on this website and instructions on how to submit VAP claims. 

As we explained in our previous posting, once the VAP begins, there will be a 120-day period within which all claims must be submitted, and approved claims will be paid by the court-appointed Claims Administrator on a rolling basis.

‪We will continue to post updates on the Government's implementation of the VAP on this website.  We therefore would encourage you to monitor this site for further important updates.

e-gold Update: Value Access Plan Approved

As my November 2, 2009 blog entry advised, we have been working diligently to develop a Value Access Plan (VAP) to allow access to e-metal account value.  We are pleased to announce that we have finalized an agreement with government authorities that will permit owners of VAP-Qualified Accounts to be paid in U.S. dollars their proportionate share of the monetized value of the e-metals in such Accounts.  Completion of an agreed upon customer identification process is a prerequisite to participation in the VAP.  Please complete this process as soon as possible and respond to any request for additional information promptly.

A VAP-Qualified Account is one (1) that does not contain value derived from suspected illegal activity; (2) as to which all required customer information has been provided to, and verified by, e-gold Ltd.; (3) that consents to having a VAP claim processed, which involves our transmission of all  VAP-required customer information, account number, e-metal balance and monetized value to a Court-appointed Claims Administrator; and (4) after review by the Court-appointed Claims Administrator and the U.S. Government, is not disqualified by either of them on the basis of (a) known engagement in criminal activity, (b) activity relating to terrorism; or (c) residence in a country (other than Iran) subject to Office of Foreign Assets Control sanctions that would prohibit the Claims Administrator from paying the claimant.

More information on how to participate in the Value Access Plan will be posted here shortly, including when and how to submit Value Access Plan claims.  Please visit this site often.  Once the claims process begins, there will be a 120day period within which all claims must be submitted (the “Claims Period”).  Claims will be processed as they are received during the Claims Period, and VAP-Qualified Account claims will be paid by the Court-appointed Claims Administrator pursuant to Court Order on a rolling basis. 

e-gold Update: Value Access

As e-gold Users are aware, by agreement with relevant authorities including the U.S. Department of Justice, e-gold has suspended all e-metal Spend activity subject to meeting certain licensing requirements.  As a result, e-gold Users have been unable to engage in any transactions, including exchanges, that would require either receiving or making an e-metal Spend from the accounts they control.

We are, however, working diligently to develop a means by which account Owners will be able to access the value in their account.  Included in this effort have been intensive discussions with various US Federal and State government authorities, including the Florida Office of Financial Regulation, the state where e-gold’s Operator is located.  We hope in the very near future to finalize a Value Access Plan that satisfies the requirements of the Office, at which point we will engage with other jurisdictions where e-gold Owners reside. Subject to the prerequisite discussed below, the Value Access Plan will allow account Users on accounts with Owners residing in jurisdictions in which the Plan is not prohibited or otherwise restricted by law to direct the exchange of value in the e-gold accounts they control for US dollars.

The prerequisite to participation in e-gold’s Value Access Plan is full compliance with e-gold’s Customer Identification Program (CIP), Customer Due Diligence (CDD), and Enhanced Due Diligence (EDD) requirements for the accounts you control. For additional information on this topic, please click here.

Further updates will be announced as they become available via the e-gold blog; therefore, please visit regularly.

e-gold Update: Owner CIP, CDD, and Agio Fee Schedule Changes

Effective immediately, e-gold requires additional information from all e-gold account Users in compliance with US legal requirements and e-gold’s “Customer Identification Program” (CIP). 

Owner Information (Owner CIP)

e-gold requires all Users to provide  information about the Owner of the e-gold accounts in User’s control.  ALL USERS ARE REQUIRED TO TAKE ACTION AT THIS TIME.

Completion of User CIP is a prerequisite to completing Owner CIP.  It is imperative for any User who has not yet completed User CIP to do so immediately.

Customer Due Diligence

Collection of information for identification and verification purposes is only one part of e-gold’s broader “Customer Due Diligence” (CDD) process.  In compliance with US requirements, e-gold requires additional information about e-gold account Owners and the intended usage of their e-gold account(s) to prevent e-gold accounts from being used for money laundering, terrorist financing or other financial crimes.  ALL USERS ARE REQUIRED TO TAKE ACTION AT THIS TIME TO PROVIDE REQUIRED INFORMATION.

Enhanced Due Diligence

As part of its “Enhanced Due Diligence” (EDD) efforts, e-gold may request other information for accounts with Owners or activity meeting certain criteria.  For example, money transmitting businesses will be subject to EDD.

PLEASE NOTE THAT IF CIP, CDD OR EDD INFORMATION IS REQUESTED, IT MUST BE PROVIDED BEFORE ANY INITIAL OR FURTHER TRANSACTIONAL ACTIVITY MAY BE PERMITTED.  FAILURE TO PROVIDE ANY OF THE CIP, CDD, OR EDD INFORMATION WHEN REQUESTED COULD RESULT IN YOUR ACCOUNT BEING TREATED AS ABANDONED PROPERTY AND ESCHEATED TO GOVERNMENTAL AUTHORITIES OR FORFEITED TO THE US GOVERNMENT.

Agio Fee Schedule Changes

Effective with the next Agio fee collection:

• The Agio fee rate for those e-gold accounts in compliance with all e-gold CIP, CDD and EDD data collection requirements in effect at the time of Agio fee collection will be reduced from 1% per annum to 0.5% per annum.
   
• The Agio fee rate for those e-gold accounts *NOT* in compliance with all e-gold CIP, CDD and EDD data collection requirements in effect at the time of Agio fee collection will be increased from 1% per annum to 10% per annum.
   
• e-gold accounts are deemed to be in compliance (for purposes of determining which Agio fee rate applies) if, as of the time Agio is collected, the User has provided *ALL* required information and documents, including any additional information or documents requested during the review process.  For this reason, it is imperative that Users login regularly in the event additional information is required.

Agio fee schedule is available here.

Advance notice of next Agio fee collection date and time is available here.

Further Agio Fee Schedule Changes

The Agio fee is the equivalent of an account maintenance fee.  e-gold Ltd reserves the right to make further changes to the Agio fee schedule based on the costs of maintaining and enhancing the e-gold system.  e-gold Ltd continues to review the Agio fee schedule in view of these costs and may announce further changes within the next 6 months.

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EVEN IF YOU BELIEVE THE ACCOUNTS YOU CONTROL TO BE FULLY COMPLIANT WITH ALL OF E-GOLD'S CIP, CDD AND EDD REQUIREMENTS, PLEASE MAKE A POINT TO LOGIN AT LEAST ONCE A WEEK TO SEE IF ANY ADDITIONAL INFORMATION HAS BEEN REQUESTED.  FOR EXAMPLE, E-GOLD INTENDS TO REQUIRE ADDITIONAL OWNER CIP INFORMATION FOR ACCOUNTS WHERE THE USER IS NOT THE OWNER (SUCH AS ACCOUNTS OWNED BY COMPANIES) IN THE NEAR FUTURE.

FAILURE TO PROVIDE ANY OF THE CIP, CDD, OR EDD INFORMATION WHEN REQUESTED COULD RESULT IN YOUR ACCOUNT BEING TREATED AS ABANDONED PROPERTY AND ESCHEATED TO GOVERNMENTAL AUTHORITIES OR FORFEITED TO THE US GOVERNMENT.

e-gold Update: Throughput Limits

Since my last post of October 19 announcing deployment of e-gold's document upload interface, numerous e-gold Users have uploaded the required documents for verifying identity and residential address. So far, however, many of you will have noticed that your accounts continue to display the message:

"Account Status: Spend Access Restricted"

and that no Spend transactions have occurred system-wide during the entire interval since that software release. There are several reasons for the delay, and each of them in turn introduces new complexities I will elaborate. The good news, jumping ahead, is that we anticipate re-opening for Spend activity, on a limited basis, within a day or two.

State licensing requirements
e-gold has approached every US state, and the District of Columbia, with either a license application or a letter requesting a determination as to whether a license is required in that state. Several states have indicated that e-gold should prevent customers from their state from using the system until a determination is made or a license granted. This meant that we had to implement programmatic modifications to selectively restrict access to Spend capabilities on a state-by-state basis. That part is done and deployed but the additional development task introduced some delay.

AML controls based on geographic (country) risk
In the past, there was a geographic pattern to criminal abuse of the e-gold system with Users from particular countries showing a much higher statistical tendency to engage in such activities. We have decided to limit this geographic risk by the temporary, and somewhat crude, means of country-specific throughput limits. Throughput limits themselves are not crude, and in fact will evolve into a cornerstone of the more refined Customer Due Diligence and risk-based Transaction Monitoring capabilities e-gold is urgently continuing to develop. The crudeness lies in their application, again temporarily, to entire countries. You will note that several countries have a zero throughput limit, that is, a complete prohibition of receiving or making Spends. We regret this and are working on the system enhancements that will enable us to reinstate usage privileges. Meanwhile, e-gold Users from these locations are encouraged to go ahead and provision their accounts, and watch for the system improvements that will support restoration of service.

Non-documentary verification
US laws and regulations governing financial institutions call for Customer Identification Programs that may involve documentary and/or non-documentary means of verification. "Documentary" means, well, looking at documents. Document upload and review is now a universal requirement for e-gold Users.

"Non-documentary" means checking individual identifiers for internal consistency - name, address, date of birth, government issued identifying number - against an external database. Initially, we were planning to use a vendor for this element of identity verification for US Users of e-gold. The vendors that provide such verification services obviously must themselves perform rigorous due diligence on their customers. Currently, e-gold is still working through that process with the vendor it hopes to use. If we had this capability for US Users of e-gold we could afford them a higher level of transaction privileges, i.e., a higher monthly throughput limit. Until we have that in place though, we are limiting US Users to the same throughput limits as Users from other OECD countries.

We plan to also implement Postal Validation as soon as possible. That enhancement to Customer Identification will support higher throughput limits for postally validated accounts, hopefully including accounts in the higher risk countries.

Disruption of exchange
A yet unsolved problem is resumption of liquid and competitive exchange markets. I will be posting additional thoughts on that topic shortly. To briefly preview, e-gold will be promulgating requirements for the regulation of exchange services, which will include a combination of government licensing requirements plus e-gold's own Enhanced Due Diligence for exchangers.

e-gold update: Customer Identification, Identity Document Review

e-gold Ltd. is pleased to announce the deployment of the next phase of its enhanced Customer Identification Program (CIP). All e-gold account Users are now required to submit documentation of identity and residential address. Each User must provide a Government issued photo ID and a second document, such as a utility bill, showing the address they supplied as part of their Point of Contact information. Images of the required documents can be electronically uploaded to the e-gold website. Document review will occur as rapidly as possible and we continue to ask for the patience of our customers, especially initially, as Customer Service staff works through the avalanche of data from existing e-gold Users.

As part of the e-gold Account provisioning process, e-gold now uniformly obtains the four essential identifying elements for a compliant CIP: the User's name, address, date-of-birth, and a government-issued personal identifying number such as a tax ID number. This latest system enhancement supports e-gold's ability to verify this data by either (or both) documentary or(/and) non-documentary means, and represents a significant milestone toward e-gold attaining full compliance with all applicable U.S. laws and regulatory requirements. Of equal significance, e-gold's robust CIP and impending Due Diligence procedures will aid in making e-gold a more secure environment for global eCommerce.

As previously noted, Users located in selected jurisdictions may also experience additional service disruptions as licensing issues are sorted out or, in the case of countries identified as posing an increased risk of online criminal activity, until additional systematic risk-based Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) measures can be implemented.

e-gold Ltd. remains highly committed to offering a cost effective Internet payment system affording instantaneous settlement, free of chargeback risk, to customers around the world. We continue to be confident that a regulated e-gold rebuilt to a more systematic specification will be less hospitable to criminals, and more attractive to mainstream business use without being less accessible to those disregarded by legacy payment systems.

e-gold update: U.S. State Licensing and Customer Identification

e-gold Ltd. is continuing to develop and deploy urgently needed system enhancements in order to achieve compliance with applicable U.S. laws and regulatory requirements. e-gold has registered with FinCEN as a money transmitting business, and is working with various U.S. state authorities to obtain licensing as a money transmitting business where required.

Licensing requirements vary from state to state and country by country. As e-gold completes this process, it is possible that Users residing in some jurisdictions may experience service disruption. We ask for your patience, and assure you we are working diligently to complete this sometimes complex process of licensing as soon as possible.

Another major focus of our efforts is a robust Customer Identification Program (CIP).

As a step towards improved customer identification, e-gold is requiring all Users to update their Point of Contact Information to a consistent format, in addition to providing their Date-of-Birth and Personal Tax Identification number. This improved quality of identifying information is being obtained in preparation for the next-stage CIP, which will include the collection of electronic images of documents to verify identity and residential address. This enhanced capability, supporting both documentary and non-documentary mechanisms of identity verification, will be implemented in the very near future.

e-gold Ltd. remains highly committed to offering a cost effective Internet payment system affording instantaneous settlement, free of chargeback risk, to customers around the world. We continue to be confident that a regulated e-gold rebuilt to a more systematic specification will be less hospitable to criminals, and more attractive to mainstream business use without being less accessible to those disregarded by legacy payment systems.

Enhancements to e-gold's Customer Identification Program

As I noted in my post to this blog on July 21, 2008, e-gold Ltd. is working diligently to reach compliance with U.S. law and regulation as quickly as possible. As a major step towards implementing a more robust Customer Identification Program, effective September 18, 2008, e-gold account Users are now required to include a Personal Tax Identification Number (PTID) for the point of contact for any e-gold account they control in order to make outgoing Spends.  For United States residents the PTID must be either their Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).  Residents of other countries will need to provide their tax identifying number applicable to their country.

e-gold Ltd. remains highly committed to continuing to offer a cost effective Internet payment system making instantaneous settlement, free of chargeback risk, available to customers around the world.  We continue to be confident that a regulated e-gold rebuilt to a more systematic specification will be less hospitable to criminals, and more attractive to mainstream business use without being less accessible to those disregarded by legacy payment systems.