Bitcoin Forum

Take SatoshiDICE for instance:
According to my (I'm not a lawyer) knowledge the following is at least highly questionable in the EU:

• no company details on the website
• no sign of a gambling license
• you would need to pay ~25% tax for your earnings every month
• anti money laundering should be okay, but "know your customer" is definitely not

I don't think a SatoshiDICE Co., Ltd. would live long when sued in the EU.

FIN-2012-A001
Issued: February 15, 2012
Subject: Foreign-Located Money Services Businesses

On July 21, 2011, the Financial Crimes Enforcement Network (FinCEN) published in the Federal Register a final rule on definitions and other regulations relating to money services businesses (Final Rule).1 The Final Rule amended the definition of "money services business" at 31 CFR 1010.100(ff). An entity may now qualify as a money services business (MSB) under the Bank Secrecy Act (BSA) regulations based on its activities within the United States, even if none of its agents, agencies, branches or offices are physically located in the United States. The Final Rule arose in part from the recognition that the Internet and other technological advances make it increasingly possible for persons to offer MSB services in the United States from foreign locations.2 FinCEN seeks to ensure that the BSA rules apply to all persons engaging in covered activities within the United States, regardless of the person's physical location.

FinCEN is issuing this Advisory to advise financial institutions of their obligations under the BSA when providing financial services to foreign-located MSBs. Financial institutions should note the following:

To qualify as an MSB, a person, wherever located, must do business, wholly or in substantial part within the United States , in one or more of the capacities listed in 31 CFR 1010.100(ff).3 Relevant factors include whether the foreign-located person, whether or not on a regular basis or as an organized or licensed business concern, is providing services to customers located in the United States.

Foreign-located MSBs are financial institutions under the BSA. With respect to their activities in the United States, foreign-located MSBs must comply with recordkeeping, reporting, and anti-money laundering (AML) program requirements under the BSA. They must also register with FinCEN.4

Foreign-located MSBs are subject to the same civil and criminal penalties for violations of the BSA and its implementing regulations as MSBs with a physical presence in the United States.

The Final Rule requires each foreign-located MSB to appoint a person residing in the United States as an agent for service of legal process with respect to compliance with the BSA and its implementing regulations.

The Final Rule became effective on September 19, 2011. Reporting, recordkeeping and AML program requirements under the BSA now apply to foreign-located MSBs. However, registration and the appointment of an agent for service of legal process will not be required until the revised registration form is available, which is currently planned for release in early March 2012.

Guidance

Financial institutions may find it necessary to update their AML programs if they provide financial services to foreign-located MSBs or engage in financial transactions with these entities.5 Financial institutions may find previously issued Guidance and Advisories helpful when incorporating foreign-located MSBs into their AML policies and procedures. In 2005, FinCEN and the federal banking agencies issued guidance (Joint Guidance) on providing financial services to MSBs operating in the United States.6 Additionally, financial institutions may find FinCEN's 2010 Advisory on informal value transfer systems (IVTS) to be useful in determining if their customers are operating as unregistered money transmitters.7

Suspicious Activity Reporting

Consistent with the standard for reporting suspicious activity under the BSA, if a financial institution knows, suspects, or has reason to suspect that a transaction conducted or attempted by, at, or through the financial institution involves funds derived from illegal activity or appears to be indicative of money laundering, terrorist financing, or other violation of law or regulation, the financial institution should file a suspicious activity report (SAR).8 As noted in the Joint Guidance, financial institutions that provide banking services to MSBs should file a SAR if they become aware that their customers are operating as unregistered or unlicensed MSBs.9

Questions or comments regarding the contents of this Advisory should be addressed to the FinCEN Regulatory Helpline at 800-949-2732. Financial institutions wanting to report suspicious transactions that may relate to terrorist activity should call the Financial Institutions Toll-Free Hotline at (866) 556-3974 (7 days a week, 24 hours a day). The purpose of the hotline is to expedite the delivery of this information to law enforcement. Financial institutions should immediately report any imminent threat to local-area law enforcement officials.

Ah, I know now why there you need to confirm that you are not a US citizen for all European online stock trading sites.

Bitcoinica was a registered financial service provider under New Zealand law. Anybody knows how that worked for them?
Are there any other experiences with setting up such a company in another country?
Torland seams the most Bitcoin friendly, unfortunately that scares off a big part of the user base an endangers you of Mtgox freezing your assets.
But I get a feeling now why Bitcoinica is offline for such a long time and nobody came up with a successor so far. It's not the programming work which prevents it happening I guess.

It has never been the programming side of things which has kept any of these sites back. It is the legal risk in running such an operation. It's not possible to run one anonymously (mybitcoins.com as an example of what happens).

It's not possible to run one anonymously (mybitcoins.com as an example of what happens).

Hi all,

 which country is most suited to found a Bitcoin based company out there? Looking for:

• Easy and cheap incorporation of a limited liability company
• Low tax
• Easy AML and KYC law

Isle of Man? Panama? Macao? Hong Kong?

On-line casinos have chosen Gibraltar or is it Malta(?).

Iceland has an MP that spoke at bitcoin conference.

Panama has interesting privacy, incorporation, etc laws.

New Zealand, Singapore and Hong Kong (and others) have laws making it easy to set-up a company.

Finland had declared bitcoin legal (only in passing I might note).

Basically it is a whole cornucopia ... I've even noticed some operations are basing the machines that store identifying customer data in places that have hard private data laws, and the servers that do transacting, processing (whatever service the business it is actually performing) in other jurisdictions that just refer to the customers as non-identifiable numbers.

It is both for online Casinos - Gibraltar & Malta, but I guess that has something to do with wanting to be in an European Country.

What's an MP?

Yes, there is a shitload of tax havens on this planet - I doubt that Finland and New Zealand are really easy to run a bitcoin company. Anybody watching how New Zealand treated the Megaupload case? Bitcoin being "legal" might not even be an advantage...

Hi all,

 which country is most suited to found a Bitcoin based company out there? Looking for:

Easy and cheap incorporation of a limited liability company
Low tax
Easy AML and KYC law

Isle of Man? Panama? Macao? Hong Kong?

What country did you decide on for your Bitcoin-based company? 

None. There was a good arbitrage opportunity before, but now with not getting money out of Gox it's meaningless.

After seeing how well the US treats online businesses I am thinking that establishing my business in the US is not the best way forward.

Are there decent web hosting companies based in Hong Kong that take Bitcoin? And what are the hurdles of starting a business there? Are there residency requirements?

Or why use any country, what if I just had a server in a different country every month? A nomadic server with no permanent home. The only permanent thing would be the domain name.

You'll need to physically move to the place where you want to establish your business, it doesn't matter where the server is (the only exception is if you own a US server, accept US customers or similar, then you can be extradited to the US for breaking US law (in reality, it doesn't really matter what you do, the US can still request you handed over, but at least you're safer with no connections to the US and can argue that in extradition court)).

I'd recommend the agorist principle, if you can. That is, don't start a company and don't disclose your location, host your sites from any country (except the US).

So far the only country that has declared Bitcoin as legal (as if) is Finland.