Bitcoin Forum

https://www.coindesk.com/fatf-crypto-travel-rule

A powerful intergovernmental organization devoted to combating money laundering and terrorism financing has finalized its recommendations on regulating cryptocurrencies for its 37 member countries.

As expected, the Financial Action Task Force (FATF) standards released Friday include a controversial requirement that “virtual asset service providers” (VASPs), including crypto exchanges, pass information about their customers to one another when transferring funds between firms.

The final recommendation makes official the contentious part of FATF’s February proposal, saying countries should make sure that when sending money, businesses should:

    “… obtain and hold required and accurate originator [sender] information and required beneficiary [receipient] information and submit the information to beneficiary institutions … if any. Further, countries should ensure that beneficiary institutions … obtain and hold required (not necessarily accurate) originator information and required and accurate beneficiary information …”

Under the new guidance published, the required information for each transfer includes:

        (i) originator’s name (i.e., the sending customer);
        (ii) originator’s account number where such an account is used to process the transaction (e.g., the VA wallet);
        (iii) originator’s physical (geographical) address, or national identity number, or customer identification number (i.e., not a transaction number) that uniquely identifies the originator to the ordering institution, or date and place of birth;
        (iv) beneficiary’s name; and
        (v) beneficiary account number where such an account is used to process the transaction (e.g., the VA wallet).

Calling the “threat of criminal and terrorist misuse of virtual assets” a “serious and urgent,” FATF says it will give countries 12 months to abide by the guidelines, with a review set for June 2020.

The so-called travel rule is a longstanding requirement for international banks when sending each other money on customers’ behalf. But blockchain industry advocates argued it would be onerous if not impossible to put into practice with crypto, harmful to user privacy, and counter-productive to law enforcement goals.

Data analytics company Chainalysis, for example, has warned that instead of more transparency, the rule would spur services to shut down or drop off the radar.

But despite hearing such concerns at a private-sector consultation meeting in Vienna last month, which drew 300 attendees, the FATF, led by the United States, pressed ahead.

To be clear: FATF’s recommendations for anti-money-laundering policies are not binding; member countries adopt them by passing legislation or writing regulations. However, countries that fall egregiously out of compliance with FATF standards get put on a blacklist, making them radioactive to foreign investment.

The crypto guidelines come a week ahead of the annual Group of 20 (G20) summit in Osaka, Japan, on June 28-29. The G20, comprised of 19 countries and the European Union, has been pushing for international harmonization of crypto regulations.

The guidelines also come just before the United States’ one-year presidency of the FATF ends on June 30. Marshall Billingslea, the U.S. Treasury official who holds the rotating post, had listed applying FATF standards to virtual currency among his top priorities.


Just when we thought it was safe to store our crypto coins in other countries- now FATF wants to make it all transparent.  This means I will be using my exchanges much less going forward.  

It's just a recommendation and not following them won't lead to being listed as a 'toxic' country for foreign investment. It's just the USA trying to spread the fear if a country doesn't want to obey. The USA has lost credibility, a lot of countries are laughing at them.

Not to say that most crypto exchanges will refuse to give anything to a govt. Like it happened with Coinbase before.

Hopefully services can take the full year before fully implementing this. In fact, they'll probably need to because this is quite an onerous undertaking for exchanges. This scope of information sharing requires a big infrastructure that needs to be built from scratch. I'm not sure if lawmakers will understand that.


It's not just the US. In fact, all the G20 countries already publicly affirmed their commitment to implementing these rules. The FATF blacklist (https://en.wikipedia.org/wiki/FATF_blacklist) has been a very effective tool in forcing countries into compliance. This works because local governments will heavily pressure exchanges to comply, for fear of being blacklisted by the global financial system.

Wouldn't it be funny if every country refused to do it - the entire globe would blacklist itself......

Sounds nice, but the only countries still considered "high risk" by the FATF and who are wholly refusing to implement its AML guidelines, are North Korea and Iran. Think about that. The rest of the world is falling in line, and the only holdouts (http://www.fatf-gafi.org/countries/#high-risk) are the world pariah states who are constantly the victims of economic sanctions and political threats from world superpowers.

One more slap from mighty USA, obey our rules or we'll put you on the black list. If we fail to destroy you on the economic front, then we will invade you or nuke you, end of story.

I'm not surprised by this attitude from the USA, but I am surprised that the rest of the world without question agrees to all conditions fearing not to end like Iran, North Korea or Venezuela, or even worse as some countries in recent past.

It was only a matter of time when someone would decide on this step, which is just a sign of fear of bitcoin and some other altcoins. I'm just interested in how crypto-exchanges and other crypto related services will handle all this work, and how many of them will stop working due to increased costs. Also this move can be linked to FB coin which should be launched next year, in a way to force users to switch on more more favorable solution.

Libra, new bitcoin - blessed by all the governments of the world >:(

There are many countries who will not abide by these rules, any large decent exchange will simply pack up and move. It's not like they have to be situated on their land, servers and data are easily transferable.

that might work for a year or two until countries start getting blacklisted by the financial system. the first FATF statement on compliance with these rules is in june 2020. they may start blacklisting at that time. at the latest, it'll start happening by 2021.

the larger the exchange, the more difficult it will be to operate in secrecy or simply pack up and move. local governments will start targeting and shuttering noncompliant exchanges once the FATF brings the hammer down.

i doubt bitmex and similar exchanges will keep operating this way at that point.

I know this can end up being a fight over semantics but these FATF recommendations are not rules, they are RECOMMENDATIONS. None of it is legally binding, even if most countries in the world have chosen to adopt their recommendations and guidelines.

In a week, these VASPs will be presenting their own responses to the FATF recommendations and briefing notes. So, let's wait to see what comes out of that.


I agree wholeheartedly haha blacklists are very funny things. Read up about so-called OECD blacklists for money laundering and tax evasion and see how useful (or not) it's become.

Who, in particular? I know Kraken and some others were discussing the formation of some global parallel information sharing system for exchanges. I imagine they'll be iterating to the FATF how burdensome these rules are, and that it'll take many months or even years for exchanges to implement an effective and compliant system.

Over that period of time, hopefully decentralized trading solutions drastically improve. To me, the writing is on the wall. The Wild West days of centralized Bitcoin exchanges are coming to an end.


I was under the impression that the FATF and OECD blacklists were pretty effective in forcing countries into compliance. Is that not the case?

I love to see how the FATF come up with this regulation/requirement with the crypto exchanges. Without any detailed public information on what happened I am wondering on how they come up that there is a "threat" with these crypto exchanges with regards to terrorist organizations using it, because really without any proof that the terrorist are using crypto exchanges to fund them this is all just a show to shook the industry. If they don't have any proof then we all know this is just one of those lame excuses used by the government to get what they want.

From what I have seen it has proven to be quite an effective measure. It by no means is a solution to the problem they are fighting against, but it makes them more efficient/effective in what they do.

The bad part about these new rules is that we can't do anything but swallow it. Even if you say avoid centralized exchanges, in my case customer data is also included in innocent purchases such as in-game items.

I'm afraid that eventually every financial transaction recorded digitally will contain a package of personal information. We definitely haven't seen the worst of how governments seek more control year after year.

If you can conduct some of your business in bitcoin and never need to cash them out, then this won't do much good. We aren't there yet though.

If a lot of people don't want their transaction history to be recorded by the government, OTC trades would get more volumes then. Long DEX short CEX.

If only it were that simple. OTC brokers and P2P exchange operators will probably be affected by these laws.

The DEX of today are all centralized in some fashion -- servers, domain, etc. They will fall in line for the same reason IDEX mandated KYC and Binance DEX is IP-blocking traders by country. Truly peer-to-peer options are few and far between.

There is only one solution, Bitcoin must be simple, clear and transparent, stable protocol and scale on chain, that makes it smoothly adaptable for anyone in the world, incl banks, institutions and govs.

Job done

In one word it should stop being decentralized cryptocurrency, it really should be like fiat under full control of some imaginary crypto central bank probably in USA, what is the opposite of what bitcoin is today. It is all about how to get full control on something, and how to control some wild cryptocurrency is something that really worries today's rulers of the world.

Bitcoin can be limited to some extent, but only way to shut it down is to turn off internet, and this is not the option. Is more control / regulation bad or good for crypto? We can say yes and no, depends on people who use or have some intention to use crypto - part of human population blindly follow all laws and regulations, and they will never use bitcoin if they do not get green light from their governments. Other part who is involved with crypto today does not worry too much about regulations, which in most cases come from corrupt governments.

This is ridiculous. They want to know what when and where you're buying. How about some privacy? I don't really want the whole bureau to know what kinky stuff I'm into. Think of the implications.

Guys, look, this one is suspicious! He bought a safe and spent bitcoin on some gold and silver bars. He's storing everything at home. Let's check what properties he owns and we'll have a location in case we need to look for some precious metals.

Thankfully, not all countries are members of FATF.

pfffff, who cares, Bitcoin is designed to handle exactly that problem. It's a bit like the US gangsterment threatening to blacklist people from using SWIFT or dollar based bank accounts; when there are alternative networks, and all the blacklisted people are trading with one another over those, then it's not only a non-credible threat, but it actually harms those doing the blacklisting more than it does their targets

On second thought, the FATF is probably not as effective as I originally assumed. According to this 2017 report (https://www.transparency.org/news/feature/glass_quarter_full_the_state_of_global_anti_money_laundering_in_four_charts), most monitored countries have only instituted basic AML regulations like making money laundering a crime and requiring banks to report suspicious transactions. Most of their recommendations go unenforced:


This sort of noncompliance may be relevant in the case of Bitcoin exchanges and brokers that don't currently require KYC:


I still expect the guidelines to further reinforce a two-tiered system of compliant and non-compliant exchanges. Services like Coinbase and Gemini will no doubt be attempting to comply with them.

Its the natural process if global adoption should happen. Maybe Libra was trigger of that, but it and more will come once more ppl will lose money on scams or illegal things are done with crypto. A lot still happens imo

"Fighting terrorism" is always just an excuse to grab more power and money for the ruling class, if the US wanted to fight terrorism, they'd punish Saudi Arabia, but instead they sell them weapons.
They don't want to say "we want to control people's finances", so they blame everything on terrorism without even showing proof that terrorists use Bitcoin.


What should they do if someone withdraws coins to their wallet instead of sending them to another exchange? Or deposits from their own wallet? What about mixers and other privacy schemes, are they going to outlaw them or what?

I'm not sure. There seems to be an implication that service providers will share information so they can identify specific persons by analyzing both sides of a transaction chain. I guess this isn't so different from Coinbase analyzing customer withdrawals multiple transactions out to identify gambling service transactions and terminate customer accounts accordingly.

This is what Bittrex and Kraken had to say:



Apparently the FATF guidelines mention mixing services (https://www.bloomberg.com/news/articles/2019-06-11/crypto-exchanges-are-facing-biggest-regulatory-hurdle-yet):


I know Gemini has prohibited the use of mixers in its terms of service for some time. We might see codification of laws intended to require these sorts of practices. Whether mixers would be outright banned is another matter.

Doing business as a cryptocurrency exchange these days is following all the rules as imposed by the government especially if one is based in USA or accepting transactions from American citizens. I am not anymore surprised if all legitimate exchanges will follow this proposed rule of exchanging or sharing customer information with each other as this is being done with traditional banking system. Soon we will witness exchanges being burdened by the same banking rules by the government and refusal to follow means one has no privilege of doing business. Well, as for me, this can be the eye-of-the-needle test for many exchanges...which in my opinion can be better than experiencing an exchange which just evaporated without a trace. Again, this is my opinion.

I consider it a challenge and a arms race. Now maybe people will pay attention to the dark net more and monero more. States lost credibility, they want debt slavery, modern monetary policy, negative interest rates, bail ins, cashless society, they want to use the blockchain based id for social credit system and minority report style tracking with 5g bandwidth to fuel it.

In many ways the point of cryptocurrency is to keep them from knowing what, who, when etc There *should* be numbered account and hidden deposit boxes in the swiss. Compulsory taxation should end globally.

  Looks like we will have to chose Magic, new crypto-trading platform from John McAfee. https://www.coindesk.com/john-mcafees-new-crypto-trading-platform-magic-goes-live (https://www.coindesk.com/john-mcafees-new-crypto-trading-platform-magic-goes-live)
  He is a freedom fighter this days, I follow him on Twitter.
  I think dex-platforms can do much about their customer information`s, we log-in with wallet directly, all they see it`s address.

He's a snake oil salesman.

Have you even looked at that platform? It looks like it was coded by complete novices.

More importantly, "McAfee Magic" is not actually an exchange. It's just an interface that integrates APIs from other exchanges. You still need to have accounts at these exchanges -- and you need to complete their KYC processes.

Even if it was an actual exchange - I wouldn't touch it with a shitty stick, or anything else with the McAfee name on it for that matter.

It'll be interesting to see how many countries actually comply with this. Sanctions are easier said than done, especially when there is national interest in some countries to keep things running as they are right now to ensure that businesses are more attracted to them.

I personally think though that this type of regulation is inevitable, and would come regardless of the bull market given the growth in adoption and market size. In essence, this is a draconian restriction put on people to make their bitcoin transacting process much more difficult than it should be.


I also would not be surprised at the least if they decided to append this list further. Namely, forcing people to provide source of funds, why they are transacting, etc. on regulated platforms. I think all this will do is drive people away from regulated platforms, and onto P2P ones.

Agreed, which is a good thing & how it should have been done in the first place.

Apparently CipherTrace and Shyft have an answer (https://bitcoinmagazine.com/articles/ciphertrace-shyft-team-id-protecting-solution-fatf-crypto-guidance) to the privacy concerns around customer data sharing vis-a-vis the new FATF guidelines. They'll create a "proof-of-knowledge identity protocol that doesn’t relinquish user information" -- and I guess we'll just have to take them at their word.

Always nice to have the likes of CipherTrace watching our backs -- and sniffing around our wallets. ::)

I also was thinking that this is only a recommendation and had hope that most of the countries will decide not to comply. This is bad, that they will be forced to do it. As others have mentioned this is a big job for exchanges and will force many exchanges to go under because they will not have the resources to collect this data.

Monero is not 100% safe. There are rumors that the authorities are now able to track at least some of the XMR transactions. And dealing in the dark market can be a double edged sword. Both the authorities an the dark market vendors can target you. You may be doing perfectly legal dealings, but once you give your delivery address to these vendors it can make you very vulnerable.

source?

no method is guaranteed to work. part of the problem with blockchains is we're leaving permanent records behind for analysis. methods that work today may be deanonymized tomorrow.

for now, i haven't seen any indication that monero---when used properly---is broken. you have to account for the anonymity set. if you cascade multiple transactions, you can likely beat law enforcement analysis, at least for now.

summarizing what they are saying is, give the following documents the exchanges like yobit:

- Your bank account number

- your passport

- your IP

-  Bank statement

- proof of address

Meanwhile the owners of the exchanges like yobit remain anonymous... what the fuck is this? In my country to have a bank account  becoming a major headache because of documents that ask

nothing will change for yobit and other small shady exchanges like it. they already don't comply with local laws (or laws where their customers reside). if they got shut down tomorrow, no one would be surprised.

it's the exchanges where operators are trying to play by the book where things will get increasingly draconian---bitstamp, coinbase, gemini, kraken. i won't be surprised if even bitfinex starts forcing mandatory KYC. that would really be the end of an era!

Implementing this plan can spend more years, but if this regulations can become successful hope can it bring for crypto into stronger possibility to become world wide currency, and hope this news can't effect of this recent bitcoin price stability.