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Author Topic: I am a certified Anti-Money Laundering agent. (AMLCA)  (Read 9703 times)
jasinlee
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March 19, 2013, 06:54:10 AM
 #41

How would policing and or controlling of fiat come into play if the exchange is based in another country, but they have a large following in the US? Would there even be a way to stop them if they were based outside the country and they used methods of payment such as moneygram, WU, Wire transfers, or even credit/debit cards?

Just remember, it's always about squeezing what they control (meaning the US Feds and/or state govs):

Moneygram (US Money Transmitter, registered with FinCEN/IRS, Licensed in all 50 states) What if they were to lose the registration or any of those state licensures? They will quickly terminate any relationship, say to BitInstant, to name just one.

Western union - same as above.

Wire Transfers - Regulated by Central Banking law - Out Feds wouldn't have to try hard to shut down the foreign intermediaries that are using the protocol.

Credit/Debit Cards - If they are the major card associations, VISA/MC/AMEX/DISCOVER/Diners/etc...the list goes on....The Feds can shut those down within hours if needed. But if they are foreign branded credit or debit cards, the nation regulating the issuing body would get involved.

You see the conundrum?

And if that country allows such activities in their country in relation to the credit cards? Would that not make cards such as the prepaid ones you find all over tor virtually untouchable?

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jgarzik
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March 19, 2013, 06:58:10 AM
 #42

In my estimation, e-Wallets are perfectly safe right now from government prying both implicitly and explicitly. They will go after the exchanges first. Anything connected to the US dollar -- they can squeeze that with existing policing infrastructure. BTC to BTC seems impervious to me right now. There are simply no mechanisms built to police it. Time will tell though, but I believe some of the earlier commenters are right that there will always be another "alternative route" to exchanging and/or storing your BTC value.

That's very interesting, thanks.

Agreed on "seems impervious" (we hope) and that existing policing mechanisms seem scant, but may I challenge you with a highly specific question:

Consider a US-based entrepreneur and company running a purely bitcoin-based e-Wallet service on US soil.  Pick your US state, excluding New York and California.  Could the entrepreneur run this e-Wallet without contacting any regulators[1]?

One of the projects discussed on IRC was an IRC micropayment bot, which is nothing more than an IRC-based e-Wallet.  Easy to code and run, but seems like it might run afoul of regulators.  Would love to be proven wrong Smiley



[1] Besides the standard ones needed to operate a US corporation, such as the IRS and state-level tax dept., municipal business licensing, etc.


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BTCINVESTOR
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March 19, 2013, 07:07:32 AM
 #43

How would policing and or controlling of fiat come into play if the exchange is based in another country, but they have a large following in the US? Would there even be a way to stop them if they were based outside the country and they used methods of payment such as moneygram, WU, Wire transfers, or even credit/debit cards?

Just remember, it's always about squeezing what they control (meaning the US Feds and/or state govs):

Moneygram (US Money Transmitter, registered with FinCEN/IRS, Licensed in all 50 states) What if they were to lose the registration or any of those state licensures? They will quickly terminate any relationship, say to BitInstant, to name just one.

Western union - same as above.

Wire Transfers - Regulated by Central Banking law - Out Feds wouldn't have to try hard to shut down the foreign intermediaries that are using the protocol.

Credit/Debit Cards - If they are the major card associations, VISA/MC/AMEX/DISCOVER/Diners/etc...the list goes on....The Feds can shut those down within hours if needed. But if they are foreign branded credit or debit cards, the nation regulating the issuing body would get involved.

You see the conundrum?

And if that country allows such activities in their country in relation to the credit cards? Would that not make cards such as the prepaid ones you find all over tor virtually untouchable?

If they are issued by institutions other than "US based" issuers such as VISA/MC, then maybe, but, for example, if Interac, a Canadian based debit association, were to issue cards and those cards were to get involved in BTC commerce in a way that Canada did not like, Canada could shut down any interaction between Interac and BTC operators (if it could be proven that is). But if the payments are done in small quantities so as not to stimulate creation of a "suspicious activity report (SAR)" in the US, say with Square or PayPal, it would be pretty tough to police small P2P BTC commerce. But not impossible.

Math based currencies will overcome all sovereign currencies over time. Buy them now.
RATM69
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March 19, 2013, 07:15:23 AM
 #44

This video pretty much sums up the governments explanation of the new FinCEN enforcement.

http://www.youtube.com/watch?v=QaxqUDd4fiw
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March 19, 2013, 07:16:03 AM
 #45

In my estimation, e-Wallets are perfectly safe right now from government prying both implicitly and explicitly. They will go after the exchanges first. Anything connected to the US dollar -- they can squeeze that with existing policing infrastructure. BTC to BTC seems impervious to me right now. There are simply no mechanisms built to police it. Time will tell though, but I believe some of the earlier commenters are right that there will always be another "alternative route" to exchanging and/or storing your BTC value.

That's very interesting, thanks.

Agreed on "seems impervious" (we hope) and that existing policing mechanisms seem scant, but may I challenge you with a highly specific question:

Consider a US-based entrepreneur and company running a purely bitcoin-based e-Wallet service on US soil.  Pick your US state, excluding New York and California.  Could the entrepreneur run this e-Wallet without contacting any regulators[1]?

One of the projects discussed on IRC was an IRC micropayment bot, which is nothing more than an IRC-based e-Wallet.  Easy to code and run, but seems like it might run afoul of regulators.  Would love to be proven wrong Smiley



[1] Besides the standard ones needed to operate a US corporation, such as the IRS and state-level tax dept., municipal business licensing, etc.

Well, I have to say that based on today's announcement from FinCEN, I think the chances of that senario being scrutinized right now is extremely low, because (and this is key) as you say, it is purely Bitcoin-based. If no "real currency" (USD, EUR, RNB, etc.) can find its way into the wallet software architecture somehow, the system will likely survive for a good long time. It's always when you interface with regulated financial institutions that the US gov can actually put a squeeze on. Just make sure that anything in and out of that system is nothing but good ole BTC and it will be safe in my opinion.

In addition, you mentioned micropayments. Generally these are considered anything less than $12.00 USD. Assuming there are limits to transaction size with the IRC system, FinCEN has way bigger fish to fry. Sounds like a way cool idea actually.

Math based currencies will overcome all sovereign currencies over time. Buy them now.
BTCINVESTOR
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March 19, 2013, 07:18:52 AM
 #46

The link to the FinCEN announcement in case you missed it:

http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html

(I guess it technically came out yesterday. It's getting late. ;^)

Math based currencies will overcome all sovereign currencies over time. Buy them now.
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March 19, 2013, 07:32:20 AM
 #47

Quote from: BTCINVESTOR
Who is this?
Wink

I'll send you an email...

;^)

Math based currencies will overcome all sovereign currencies over time. Buy them now.
Severian
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March 19, 2013, 07:43:55 AM
 #48

In addition, you mentioned micropayments. Generally these are considered anything less than $12.00 USD.

Interesting. An idea for you to shoot down...

The legal face value of an American silver Eagle is $1. ATM, $10 in face value eagles is worth ~$300 in fiat or ~6 btc. If a dealer were to sell ~6 btc for $10 face (assuming that the buyer also agrees to the revaluing), would this would fall under micropayments?
BTCINVESTOR
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March 19, 2013, 07:55:52 AM
 #49

In addition, you mentioned micropayments. Generally these are considered anything less than $12.00 USD.

Interesting. An idea for you to shoot down...

The legal face value of an American silver Eagle is $1. ATM, $10 in face value eagles is worth ~$300 in fiat or ~6 btc. If a dealer were to sell ~6 btc for $10 face (assuming that the buyer also agrees to the revaluing), would this would fall under micropayments?

According to the federal government (Disclaimer: right now). Yes, that would be a micropayment. But even if the government cared about that transaction in some way right now, there is almost nothing they could do to police it. Much like outlawing sodomy or something.

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Severian
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March 19, 2013, 08:01:04 AM
 #50

Yes, that would be a micropayment.

Good to know. Many thanks for the info.
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March 19, 2013, 08:04:18 AM
 #51

1) Aside from US-based exchanges (and international exchanges dealing in USD) having to register as Money Transmitters, what are the other real-world implications of the new FinCEN regulations?
2) How much does registering as a Money Transmitter actually cost?
3) The way I understand what is written in the FinCEN statement, miners who sell directly to other people would have to be registered Money Transmitters, but miners who sell to other people through an exchange would not (since the exchange is already acting as the Money Transmitter in that case).  Is this true?
4) How feasible would it be for the government to actually regulate direct miner-to-people trades for USD?  For example, people selling Bitcoins on localbitcoins.com?
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March 19, 2013, 08:29:14 AM
 #52

Do you believe Bitcoins will play an important role in carrying forward the http://en.wikipedia.org/wiki/Hawala System in the future? It seems to perfectly fit the purpose as long as there are exchanges on both sides.

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March 19, 2013, 08:32:11 AM
 #53

1) Aside from US-based exchanges (and international exchanges dealing in USD) having to register as Money Transmitters, what are the other real-world implications of the new FinCEN regulations?
2) How much does registering as a Money Transmitter actually cost?
3) The way I understand what is written in the FinCEN statement, miners who sell directly to other people would have to be registered Money Transmitters, but miners who sell to other people through an exchange would not (since the exchange is already acting as the Money Transmitter in that case).  Is this true?
4) How feasible would it be for the government to actually regulate direct miner-to-people trades for USD?  For example, people selling Bitcoins on localbitcoins.com?

My thoughts:

1) In "real world" terms, it means the feds will scrutinize heavily any "legitimate and regulated US based financial institution" that has anything to do with BitCoin. They are making this crystal clear.

For example, a ton of people upload USD to Mt. Gox with Dwolla.

Dwolla is only able to operate using a partnering bank/credit union within the United States to process its ACH payments. All banks in this country are regulated by the feds in several ways, e.g. FDIC, Comptroller of Currency, Treasury, etc. Now NACHA (run by US gov), handles all check processing (a.k.a. ACH transactions) through the Federal Reserve (approx. 21 trillion in payments anually). Dwolla has no other mechanism of exchange with US citizens other than through the good graces of our lovely US govt. They will want to keep that key relationship. The new FinCEN guidelines are saying, in my opinion, that Dwolla is going to have to act as a barrier to money laundering somehow, and not just through their partnering bank (Dwolla is not wanting to admit this right about now).  Moreover, their partnering bank might catch heat in being partnered with them. Dwolla could conceivably have to consider discontinuing it's relationship with Mt. Gox, perhaps by order of their partnering bank, as a possible senario, unless they make dramatic changes to the way they screen money going in and out. Dwolla will need to invest heavily in compliance at this point to keep everyone happy. They may reduce amounts uploadable to Mt. Gox or in general as a precaution, so they don't trip the thresholds for further monitoring of customer-based transactions.

At any rate, I sure would hate to lose the ability to upload my funds using Dwolla. It is a very well conceived portal and works nicely for me when buying BTC on Mt. Gox, so a ton of people would be disappointed to see a bottleneck form there. I could go on and on about the big players emerging and how much of a burden this could place on them as fairly early startups, i.e. such as Coinbase, Coinlab, etc. They all have to take big notice of this new info right now.

2) I think it's 100 bucks or something, but that's not the challenge. A new MSB or money transmitter, once registered must institute major changes (expensive ones) to the way they do business. They must have things like independent audits, robust interdiction software protocols (usually custom made), and additional staff to manage reporting requirements.

3) You have this one backwards. The exchanges that interface with major US institutions are the only ones they can really do anything about and they know it. The miners selling directly to others will be much safer in my opinion. Much safer.

4)Practically impossible to regulate direct miner-to-people transactions...This is why we have all fallen in love with Bitcoins in the first place right? ;^)

Math based currencies will overcome all sovereign currencies over time. Buy them now.
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March 19, 2013, 08:37:21 AM
 #54

Do you believe Bitcoins will play an important role in carrying forward the http://en.wikipedia.org/wiki/Hawala System in the future? It seems to perfectly fit the purpose as long as there are exchanges on both sides.

Yes. Ideally suited for.

Although, Hawala's "magic" can be done with pretty much anything of value. You may be surprised to know that there are some fairly large institutions out there that mimic the same concept of "motionless" money exchange to bypass currency exchange fees. It's pretty cool stuff.

Math based currencies will overcome all sovereign currencies over time. Buy them now.
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March 19, 2013, 10:05:06 AM
 #55

Quote
I am a certified Anti-Money Laundering agent. (AMLCA)

What does this mean? Are you a policeman?

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March 19, 2013, 10:07:39 AM
 #56

USD = Titanic
Bitcoin=Iceberg.

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March 19, 2013, 10:32:14 AM
 #57

The deep question is how do we prempt this now...

If exchanges are the Achilles heal, then lest get serious about creating a decentralized exchange BEFORE it becomes necessary.
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March 19, 2013, 10:39:51 AM
 #58

Quote
I am a certified Anti-Money Laundering agent. (AMLCA)

What does this mean? Are you a policeman?

No. Just a certified auditor.

Math based currencies will overcome all sovereign currencies over time. Buy them now.
Gator-hex
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March 19, 2013, 11:51:53 AM
 #59

Quote
I am a certified Anti-Money Laundering agent. (AMLCA)

What does this mean? Are you a policeman?

No. Just a certified auditor.

You miss the point of bitcoin, it's goal is to replace national currencies, even if there were no exchanges, only Wall Street speculators would care.

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March 19, 2013, 12:09:30 PM
 #60

So now they come with laws and regulations.
There goes the small guy.
Anyone who wants to stay in business will need deep pockets to "buy compliance" <-- This is what it's all about.

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