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

[Lethn]

Please, them trying to regulate Bitcoin is going to be like them trying to regulate Bittorrent, these guys don't know a thing about computers, I'll have whatever they put up bypassed in five seconds and I have no hacking knowledge whatsoever.

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[TransaDox]

I had my doubts originally, but it looks like MtGox offloading US and Canadian customers to Coinlab was a smart move.

[adamluc]

I think the new regulation will help adoption of bitcoin, and hence all users of bitcoin. By increasing regulation, it becomes more visible and more demand for bitcoin will result in higher bitcoin prices.

[TheJamesFund]

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

What does this mean? Are you a policeman?

No. Just a certified auditor.

So are you an private auditor for private sector or a federal agent? From reading all your post(s) I do believe you are well knowledge based on AML regulations, but are you really an AGENT. It seems to be a conflict of interest working as an agent and then hording BTC. Maybe I am confused but if someone says "I am a certified AML agent" it would mean to me you are like the IRS and I would run far away from you.

Anyone here can explain this better...

I send money through Dwolla and deposit in to MTGOX, so then I buy bitcoins, sell them and put money back into bank to dwolla... so now I am on the radar for money laundering?

And last question, "buy all the BTC as I can" okay, then what? If I can't sell them and make money without having a red target on my forehead, wtf am I suppose to do?

[Stephen Gornick]

The general understanding is that a merchant selling goods and services and accepting bitcoin as payment is not an exchange or money transmitter.

Is this a safe assumption because:

FIN-2013-G001

An exchanger is a person engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency

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

and the mechant is not engaged in the exchange so therefore isn't an exchanger?


Or, is it because:

31 CFR § 1010.100(ff)(5)(ii)(F):

The term “money transmitter” shall not include a person that only:
(F) Accepts and transmits funds only integral to the sale of goods or the provision of services, other than money transmission services, by the person who is accepting and transmitting the funds.

[RodeoX]

As these regulations roll out we (bitcoin peers) need to be vocal in shaping the law. The best way to express our will in the financial arena is with our money. Refuse to pay high fees, do not use systems that limit control of your BTC ; in short, preserve the financial freedom bitcoin can offer. It may even come to acts of civil disobedience. 

If bitcoin goes mainstream, there will be huge efforts to take it from the hands of peers and make meta money off of it. The banks are very powerful and when one sees how they run right over governments, it is easy to see that you bitcoin peers are a tiny speck of dirt to them.
Satoshi gave you a tool, but you have to do the work. The real fight for bitcoin is about to begin. Let's work with regulators or the banks will decide the future of bitcoin.   

[niko]

Doesn't matter if they are only "domestic". The definition of "Money Laundering" includes "erasing" or "obscuring" paper trail. If an institution can perform this action, regulatory hounds will follow. At least eventually. But remember, Dwolla is one of the favorite mechanisms to upload USD to Mt. Gox. That is fully international.

No. Dwolla sends USD to Mutum Sigillum, a U.S. entity. They are the ones doing the international transfer, at least until March 23 when coinlabs take over and keep it all "domestic" for U.S. clients.

[TheJamesFund]

All so confusing

[DeathAndTaxes]

So are you an private auditor for private sector or a federal agent?

Neither it is like being certified in using Microsoft word.  It is a check the box type certification so a cash handling business can say their employees were trained.  A couple hours of study (online courses available) and a multiple choice exam. 

[SgtSpike]

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? ;^)

Thanks for taking the time to answer these in detail.  Cheers! 

[BTCINVESTOR]

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.

I as well as you would like to see Bitcoin rise to prominence, but people have to have an acceptable way of buying in until it stands on its own feet. It must interface with accepted currency channels in the meantime.

[BTCINVESTOR]

I think the new regulation will help adoption of bitcoin, and hence all users of bitcoin. By increasing regulation, it becomes more visible and more demand for bitcoin will result in higher bitcoin prices.

Well said.

It was inevitable that if Bitcoin were to become a serious player, it would have to play nicely (at least for a time) with some of the big money feeding mechanisms. This is a good thing in my opinion. Bitcoin is the real deal. It will always be decentralized, but a ton of legitimate folks want to get in on it and they don't want to feel that they have to buy them from some guy on the corner. Legal channels into Bitcoin can only strenthen it.

[ProfMac]

I think the new regulation will help adoption of bitcoin, and hence all users of bitcoin. By increasing regulation, it becomes more visible and more demand for bitcoin will result in higher bitcoin prices.

Well said.

It was inevitable that if Bitcoin were to become a serious player, it would have to play nicely (at least for a time) with some of the big money feeding mechanisms. This is a good thing in my opinion. Bitcoin is the real deal. It will always be decentralized, but a ton of legitimate folks want to get in on it and they don't want to feel that they have to buy them from some guy on the corner. Legal channels into Bitcoin can only strenthen it.

I agree.  Aurum and Bitfloor have my identity papers.  I am on the way to the bank to test a wire transfer.
I previously verified that an ACH will return money to my bank.

[BTCINVESTOR]

Doesn't matter if they are only "domestic". The definition of "Money Laundering" includes "erasing" or "obscuring" paper trail. If an institution can perform this action, regulatory hounds will follow. At least eventually. But remember, Dwolla is one of the favorite mechanisms to upload USD to Mt. Gox. That is fully international.

No. Dwolla sends USD to Mutum Sigillum, a U.S. entity. They are the ones doing the international transfer, at least until March 23 when coinlabs take over and keep it all "domestic" for U.S. clients.

For purposes of regulation, it doesn't matter how the money gets to Japan. It must be monitored for money laundering activities. Dwolla will not be able to continue to escape this.

[SgtSpike]

How long has FinCEN known about Bitcoin and been planning to regulate it?

[jgarzik]

For purposes of regulation, it doesn't matter how the money gets to Japan. It must be monitored for money laundering activities. Dwolla will not be able to continue to escape this.

Recently, my one-person microbiz had to AML/KYC with Dwolla, to continue transferring to/from MtGox. Based on my experience and conversation with the Dwolla employee, it sounds like this is a special procedure for MtGox, that does not apply to most other dwolla users.

[BTCINVESTOR]

How long has FinCEN known about Bitcoin and been planning to regulate it?

I don't know how long FinCEN has truly considered Bitcoin a serious player, but likely not very long knowing government bureaucracy.

But frankly, I am not seeing FinCEN going after Bitcoin itself. I'm sure they are quite dumbfounded as to how to do such a thing. But what they can do is put pressure on any legitimate entity that hooks up to it in a formal way.

[jgarzik]

But frankly, I am not seeing FinCEN going after Bitcoin itself. I'm sure they are quite dumbfounded as to how to do such a thing. But what they can do is put pressure on any legitimate entity that hooks up to it in a formal way.

Perhaps not FinCEN, but financial reporters at anti-money laundering conferences report that the FBI is "very aware" of bitcoin, as is the SEC.  The leaked FBI report on bitcoin was quite knowledgeable and matter-of-fact.

Yesterday's FinCEN guidance makes it seem more likely that LEAs would target individual criminals, rather than bitcoin network and users en masse.

[BTCINVESTOR]

For purposes of regulation, it doesn't matter how the money gets to Japan. It must be monitored for money laundering activities. Dwolla will not be able to continue to escape this.

Recently, my one-person microbiz had to AML/KYC with Dwolla, to continue transferring to/from MtGox. Based on my experience and conversation with the Dwolla employee, it sounds like this is a special procedure for MtGox, that does not apply to most other dwolla users.

They definitely are doing a nice job with AML/KYC from what I can tell, but that's not going to be enough. They are going to have to register with FinCEN and seek state licensures as well. A huge undertaking. They will be ahead of the game compared to some startups. But will their partnering bank continue to allow them to use their ACH services while unlicensed?

Hard to say what will happen, but we had to know that as Bitcoin becomes more powerful, regulatory forces will step in at a rate proportional to the amount of influence it wields.

The good news, is all of us that love to use Bitcoin as individuals and want to buy or sell using them, the sky is currently clear.

[BTCINVESTOR]

But frankly, I am not seeing FinCEN going after Bitcoin itself. I'm sure they are quite dumbfounded as to how to do such a thing. But what they can do is put pressure on any legitimate entity that hooks up to it in a formal way.

Perhaps not FinCEN, but financial reporters at anti-money laundering conferences report that the FBI is "very aware" of bitcoin, as is the SEC.  The leaked FBI report on bitcoin was quite knowledgeable and matter-of-fact.

Yesterday's FinCEN guidance makes it seem more likely that LEAs would target individual criminals, rather than bitcoin network and users en masse.

Agreed.

Anyone doing serious money in Bitcoin will be targets of investigation going forward. Casual investors and merchant activities are not in the cross hairs that I can tell.