Bitcoin Forum

Following Bitfinex’s announcement to disable fiat deposits, more bitcoin exchanges are having the same issue. The other trading platforms have also disabled incoming USD wire transfers, citing bank account and “intermediary bank” problems.
Deposit Problem Spreading to Other Exchanges

Bitfinex is not the only bitcoin exchange which has disabled fiat deposits. The bitcoin exchange Btc-e has also announced on Twitter that it is not accepting U.S. dollar wire transfers until the end of the month, citing a bank account problem.
The Chinese exchange, Okcoin, is also reportedly having the same issue. A Reddit user posted a message supposedly displayed on the user’s account stating that U.S. dollar deposits have been temporarily suspended since Wednesday “because of the issues with intermediary banks.” The announcement further reads: “Please do not make further deposit as your wires may be rejected by intermediary banks. We are now actively looking for alternatives to resume deposit as soon as possible.”

A few other cryptocurrency services and money service businesses are reportedly encountering the same problem as well.

Third Party Banks “De-Risking”

Intermediary banks and correspondent banks are third party banks. The terms are sometimes used interchangeably. Regardless of any slight differences, they both facilitate international fund transfers as well as transaction settlements.
When Bitfinex filed a lawsuit against Wells Fargo, it was revealed that Wells Fargo was acting as a correspondent bank for the Taiwan-based banks which Bitfinex uses.

Big banks have been known to “de-risk” correspondent banking relationships that are considered high risk for their businesses. It is a common problem. According to the World Bank, “this risk avoidance would typically occur on a wholesale basis, without a case-by-case assessment of the risk associated with individual customers, or the country or region involved, or as a result of an analysis indicating that the business relationship as a whole was no longer profitable.” Therefore, it would not be uncommon for a bank such as Wells Fargo to sever its correspondent banking relationships with other Bitcoin businesses in the same way it did with Bitfinex.

Taiwan Banks Tightening AML Requirements

Following Wells Fargo’s de-risking decision which only affected outgoing wires, Bitfinex informed customers that all its incoming wires will be “blocked and refused” by its Taiwan banks.

According to an article by Whalecalls, banks in Taiwan did not previously have strict AML/KYC requirements, but they were enough to comply with U.S. regulations. However, the U.S. has recently revised these requirements. The U.S. Department of Financial Crimes Enforcement Network (Fincen) is now requiring businesses operating as a money transmitter to report any suspicious activities. “A report must be filed when a transaction that is conducted by, at or through the MSB [money service business] is both: suspicious, and $2,000 or more,” Fincen wrote on its website. Bitcoin exchanges are classified as money transmitters, according to the agency.
While the U.S. has tightened its control over activities of money transmitters, Taiwan also has its own agenda when it comes to ramping up its AML/KYC efforts. On March 16, the Taiwanese government established an office to combat money laundering to help build a more transparent and orderly financial environment, according to Focus Taiwan publication.

It also aims to beef up “money laundering prevention before the third evaluation round of the Asia/Pacific Group on Money Laundering (APG) next year,” the publication reported the country’s Premier Lin Chuan saying, adding that Taiwan is currently on the APG watch list.

In August last year, the New York State’s Department of Financial Services (DFS) fined Taiwan’s Mega Bank US$180 million “for its poor compliance practices, after identifying ‘a number of suspicious transactions’ between the bank’s New York and Panama branches,” the publication further details. The Taiwanese Deputy Justice Minister Tsai Pi-Chung then noted that this incident damaged the credibility of Taiwan’s financial activities worldwide, which should be rectified.

Bitcoin exchanges’ deposit problems started soon after the Taiwanese regulators set up the AML office. While U.S banks are de-risking and Taiwan is determined to regain its credibility, so that it is taken off the APG watch list, the situation is looking grim for any bitcoin exchanges using banks in Taiwan.
https://news.bitcoin.com/bitcoin-exchanges-victim-banking-problems/

Cryptocurrencies pose a clear threat to the banking business, and the banks are responding.
The bitcoin exchanges will be eventually forced to emancipate from bank in order to survive, and then let the market decide which option is the best.

It should be obvious to everyone that central banks are stomping down on crypto. They are focusing on cutting off the migration of fiat outside of their system. One call from a central bank and the corresponding banks won't send wires anymore. You'd better get whatever out of the banking system you can move NOW.

They want full identification of all their costumers first before allowing any money transfer, it means day traders will no longer be able to profit by selling high buying back when price goes down and rinse and repeat. people can still buy and sell directly either in this forum or in localbitcoins.

There are many other exchanges out there and I suppose this is their golden opportunity to earn some fees on the wave of new clients going there to use their untouched exchange.

Or maybe it's just an attempt to push USDT and force people to use tether?

And of course this doesn't mean they are trying to harm bitcoin, no they are trying to prevent illegal deals, money laundering transactions and such.

I don't care what currency is used as long as I have a decentralized crypto world currency option.

Lol banks are proving the need for crypto by trying to clamp down on it. What happened at Bitfinex? The value of Bitcoin went up, or other words USD went down. Why? Becuase Bitcoin became more useful. People didn’t need to go through the banks to send/receive it.

I bet RipoffFinex screwed it up for everyone.

Likely scenario, a pattern of wire transfers or banking operations between banks alerted their money-laundering controls. Upon closer inspection, the bank finds much to its horror that the money flowing in and out of BFX could easily be categorized as laundering, putting the bank at risk.

Instead of asking for clarification, the bank does what it always does, covers its ass by cutting off the client. This in turn causes other banks to take notice and then inspect THEIR clients activities more closely. Bingo, there's more problems with exchanges that had accounts that didn't make it obvious they were money exchangers.

And so on and so on until all the little mickey-mouse operations are plowed under by the cogs of regulation and big business.

Exchange rate on Bitfinex went up because people can't withdraw any USD, and thus the only way to escape that exchange is to convert every dollar they have into Bitcoin -- which explains their higher price. Other exchanges are just following with caution. They know very well that the price will come down as soon as withdrawals are being put to work again. Don't get too excited already -- it's pointless.

USD is an old fashioned relict which should be definitely thrown out of the international trade. US government is with the help of correspondent banks supervising each dollar used abroad. All USD transactions in any country are first going through New York. There is a long black list of all destinations. Bitcoin exchanges are labeled as terrorists financing – forbidden.
Exchanges have to use CHF, Eur, £ or of course remimbi.
Future world trade will be dominated by Chinese and Germans. No dollars are necessary.

That is right. I only use the bitcoin to buy things directly. I do not change into fiat first.

I'd be quite happy to see the banks take down all centralised exchanges - they're all corrupt middlemen who take a cut anyway.

The sooner this happens, the sooner p2p & decentralised exchanges can take hold & crypto users will be safer & better off for it.

I get your point, but it doesn't work like that for the majority of the people. I also agree that current exchanges are far too centralized and only care about their own gains, but people simply want exchanges like this. Decentralized exchanges don't allow people to trade properly. Each transaction takes a serious amount of time (from a minute to possibly 30-60 minutes in case of Bitcoin) to settle. People that are only interested in buying and selling Bitcoin from time to time will have no problems with this, but traders will always prefer current exchanges over anything decentralized. It's the demand that keeps these centralized exchanges running.

Not only that, but it's practically impossible to have a decentralized exchange running that allows people to execute fiat related trades without losing its decentralized branding/aspect. Only thing decentralized about these exchanges are their coin to coin trades. From there people should just look for alternatives such as LocalBitcoins where you meet face to face in a relatively crowded and safe environment.

I use Localbitcoins frequently, both online & in person, but mostly online. Bitsquare is also a regular haunt of mine. Both suit my needs & are safer, more private &  are free from the risks, costs & manipulation that all other centralised exchanges suffer from.

Most importantly, no entity can restrict/control/regulate them in any way. True crypto freedom.

RichardsNY raised a good point - If you look at Bitsquare, their platform may be decentralized, but as soon as you operate outside the platform, which happens to be the case when you deposit/cashout fiat, then you depend on a central authority, which in this case are the payment services they are connected with. If that's not a problem for you, then it's all fine.