german law in the making; e-money, money laundering, no anonymous transactions

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http://www.heise.de/newsticker/meldung/Anonyme-Online-Zahlungen-durch-Geldwaeschegesetz-moeglicherweise-vor-dem-Aus-1269409.html

translation:

http://de.babelfish.yahoo.com/translate_url?doit=done&tt=url&intl=1&fr=bf-home&trurl=http%3A%2F%2Fwww.heise.de%2Fnewsticker%2Fmeldung%2FAnonyme-Online-Zahlungen-durch-Geldwaeschegesetz-moeglicherweise-vor-dem-Aus-1269409.html&lp=de_en&btnTrUrl=%C3%9Cbersetzen

http://translate.google.de/translate?js=n&prev=_t&hl=en&ie=UTF-8&layout=2&eotf=1&sl=auto&tl=en&u=http%3A%2F%2Fwww.heise.de%2Fnewsticker%2Fmeldung%2FAnonyme-Online-Zahlungen-durch-Geldwaeschegesetz-moeglicherweise-vor-dem-Aus-1269409.html

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[wareen]

It has to be noted, that although this would effectively prevent German merchants from legally accepting anonymous payments with "e-money", the legal definition of "e-money" in this context seems not to encompass Bitcoin according to the opinions in the German forums.

We will have to wait for definitive statements by legal experts on this one though. Until then it is probably safe to assume that decentralized crypto-currencies like Bitcoin without an actual issuer against which you have a specific claim in exchange for Bitcoins are not covered by this proposal.

[chad]

Here is the text from google translate (it kept resetting and giving an error making it hard to read)..



"The Federal Government has its " bill to improve the prevention of money laundering transmitted "(PDF file) of the Federal Council. This is a draft until 8 July comment. Apart from reducing Bareinzahlungsgrenze from 15,000 to 1,000 € and the introduction of a money laundering officer for all businesses with more than nine employees, it includes a provision to "electronic money": When exchanging euros into e-money must continue the depositor will be verified. This arrangement eliminates the possibility of prepaid cards as paysafecard deposit money can be paid anonymously, with some fee-based anonymization services on the Internet.

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The optimization of the money laundering prevention is to have a strong impact in early 2012. This is an obligation to report certain financial transactions, expanded considerably. Accountants, lawyers and notaries are required to report suspicious transactions as well, such as car dealers, when the "politically exposed persons" and their families make a deal. For example, buys the wife of a foreign diplomat is a car, the dealer obliged to report it.

Determining whether a buyer is part of the perimeter of the "politically exposed persons" holding, the German Industry and Commerce (DIHK) is unreasonable . "Unlike banks, which have developed here a number of separate databases and internal exchange systems, a small business is simply not able to identify politically exposed persons, in practice," tells the DIHK. Also, foreign customers or contractors are not put under general suspicion in the future. Oblige companies with more than nine employees to appoint a money laundering officer and train all employees in regard to money laundering, for many of them would be a costly affair.

With "e-cash" payment systems such as the EU-developed system of research funds are paysafecard to buy digital goods as intended. This credit can be purchased at a retail outlet, which paid for the Internet if the retailer accepts Paysafe. In future, point of sale such as dealers take over the customer's identification and hold for a possible audit. Unlike the cash deposit to accounts of third parties, which from 1000 € (previously € 15,000) are subject to reporting, there is no minimum for e-money limit. If it would, one could no longer be paid anonymously on the Internet. In addition to the aforementioned fee anonymizers this applies, for example, users who use the paysafecard in the Sony Playstation Network, and therefore the least affected by the recent data losses were.

Paysafecard himself sees the optimization of the Money Laundering Act relative left: The company is actively involved in the legislative process and is preparing to implement any necessary organizational and technical product changes. The draft will not occur before the start in 2012, there was therefore no need for action now. Heise "We are now convinced, even in 2012 to operate the business model Paysafecard active and successful in Germany," spokeswoman Daniela Paysafecard Kazmaier told online. (Detlef Borchers) / ( anw )""

[Sukrim]

Yes, in my opinion too it is not a real possibility that BTC gets banned/regulated (maybe bigger exchanges?) - but it could lead to more adoption of Bitcoin, since until then it will be already an established system/alternative.

If needed, I'll make a proper translation... this Google translate might be nice, but is not too useful if you want to really understand the article.

[Timo Y]

Bitcoin doesn't have to be anonymous.

Exchanges won't be affected by this law because they already know the bank details of all their customers.

Merchants of physical goods know their customers' names and addresses, no matter how they pay.

The only businesses hurt by this law are sellers of virtual goods and services, such as MMOGs, but there is no particular reason to buy those in Germany, even if you live there.  

[wareen]

Merchants of physical goods know their customers' names and addresses, no matter how they pay.

Well, there are lots of places where you usually don't have to identify yourself upon payment. Pretty much every bar, restaurant, supermarket, grocery etc. would be effectively prohibited from ever accepting "e-money" because it would probably be too much of a hassle to identify yourself there.

Granted, these are surely not the main use-cases for such forms of payment but it's still sad to see that given such legislation, we will never advance beyond having to carry around coins to pay for coffee unless you are willing to officially link each and every coffee you drink to your identity.

Something about the direction this seems to be heading starts worrying me...

[ribuck]

If anonymous money is outlawed, only outlaws will use anonymous money. How exactly does that benefit society?

[dennis_sweden]

Yes, in my opinion too it is not a real possibility that BTC gets banned/regulated (maybe bigger exchanges?) - but it could lead to more adoption of Bitcoin, since until then it will be already an established system/alternative.

If needed, I'll make a proper translation... this Google translate might be nice, but is not too useful if you want to really understand the article.

Hi Sukrim, I would very much appreciate if you would translate the article; as you say these google translations only allow readers to grasp the information contained rahter than understand it.

EDIT: ONLY THIS PARAGRAPH IS DIFFICULT TO UNDERSTAND

"With "e-cash" payment systems such as the EU-developed system of research funds are paysafecard to buy digital goods as intended. This credit can be purchased at a retail outlet, which paid for the Internet if the retailer accepts Paysafe. In future, point of sale such as dealers take over the customer's identification and hold for a possible audit. Unlike the cash deposit to accounts of third parties, which from 1000 € (previously € 15,000) are subject to reporting, there is no minimum for e-money limit. If it would, one could no longer be paid anonymously on the Internet. In addition to the aforementioned fee anonymizers this applies, for example, users who use the paysafecard in the Sony Playstation Network, and therefore the least affected by the recent data losses were."

[Waldschrat]

Well, if I understand this correctly this law wouldn't affect Bitcoin at all. All Germans could just go on to send money from Germany to France (where the MTGox SEPA account is located) to purchase Bitcoins. Where is the problem?
Just to make this post a bit more populist: The German government sucks!

[fornit]

i fixed the translation of that paragraph. still a bit ackward, but the original wasnt a hot candidate for a beauty contest either.

"e-cash" refers to payment systems for paying digital goods, such as paysafecard which was developed with EU-research funds. This credit can be purchased at a (offline) shop, which you can use in online shops that accept paysafe. In future, both of them have to identify the customer and store the corresponding data for a possible audit. Unlike cash deposits to accounts of third parties, which from 1000 € (previously € 15,000) are subject to reporting, there is no minimum for e-money. So if that bill is passed, one could no longer pay anonymously on the internet. In addition to the aforementioned anonymizers which charge a fee this also applies for, for example, users who used the paysafecard in the Sony Playstation Network, and therefore were least affected by the recent data losses."

[Sukrim]

Yes, in my opinion too it is not a real possibility that BTC gets banned/regulated (maybe bigger exchanges?) - but it could lead to more adoption of Bitcoin, since until then it will be already an established system/alternative.

If needed, I'll make a proper translation... this Google translate might be nice, but is not too useful if you want to really understand the article.

Hi Sukrim, I would very much appreciate if you would translate the article; as you say these google translations only allow readers to grasp the information contained rahter than understand it.

Original:

Mit "E-Geld" sind Zahlungssysteme wie das mit EU-Forschungsmitteln entwickelte System der Paysafecard als zum Kauf digitaler Güter gemeint. Dabei werden Guthaben bei einer Verkaufsstelle erworben, mit denen im Internet bezahlt werden kann, wenn der Händler Paysafe akzeptiert. Künftig müssen Verkaufsstelle wie Händler die Identifizierung des Kunden übernehmen und für eine mögliche Prüfung vorhalten. Anders als bei der Bareinzahlung auf Konten Dritter, die ab 1000 Euro (bisher 15.000 Euro) berichtspflichtig sind, gibt es beim E-Geld keine Mindestgrenze. Falls es dabei bliebe, könnte so nicht mehr anonym im Internet bezahlt werden. Neben den erwähnten kostenpflichtigen Anonymisierern trifft dies beispielsweise auch Nutzer, die die Paysafecard im Sony Playstation Network einsetzen und deshalb am wenigsten von den Datenverlusten der jüngsten Zeit betroffen waren.

Translation:

"E-money" means payment systems like the system of "Paysafecard", which was created using EU research funding, which are used to buy digital goods. With these cards a credit/balance is being bought at a selling point which can then be used in the internet, if the merchant accepts "Paysafe". In the future, the selling point as well as the merchant need to do the task of identifying the customer and keep this data for a possible inspection. In contrast to depositing money in cash to a bank account of someone else, which need to be non-anonymous at amounts in the excess of 1000 EUR (before: 15 000 EUR), there is no minimum level planned with E-money [meaning: every transaction needs to be non-anonymous with Paysafecards et.al.]. If it stays as planned, there would be no possibility to pay anonymously in the internet this way. Besides paid anonymizing services mentioned above, this also would hit users who use Paysafecards in the Playstation network, who were the least affected from the recent data leaks because of this.

As the suggested law defines e-money as being something issued + sold by someone which is redeemable in multiple places (also other than the original issuer, to not hit iTunes cards and other gift cards most likely) Bitcoin will very likely not even be seen as e-money, since it is NOT issued by someone specific and they are not redeemable for anything or backed by anything.

[dennis_sweden]

Thank you for the translation. I have been able to do some rudimentary research thanks to the translation. It appears to be that the German legislation is subsequent to EU legislation, and as such is applicable in the whole of the EU, although Germany have apparently opted to adopt more stringent rules than required; it is not relative to Bitcoin per se, although I am absolutely positive that when the legislative or judicial branch consider Bitcoin, it will view it as being an electronic currency due to the fact that it does perform functions of electronic money; i.e. you can purchase goods/services with bitcoins. So I believe it is, by extension, relevant to Bitcoins. Or to put it in another view; when there exists very specific regulation regarding electronic payment, will the same authorities not subject Bitcoins to legislation if Bitcoins become used in a wider manner than today?

Directive 2005/60/EC (money laundering and terrorist financing) applies as follows:

“This Directive shall apply to:

ii) managing of client money, securities or other
assets;

(e) other natural or legal persons trading in goods, only to the extent that payments are made in cash in an amount of EUR 15 000 or more, whether the transaction is executed in a single operation or in several operations which appear to be linked;

Article 5

The Member States may adopt or retain in force stricter provisions in the field covered by this Directive to prevent money laundering and terrorist financing.

Article 7

The institutions and persons covered by this Directive shall apply customer due diligence measures in the following cases:

Article 8

1. Customer due diligence measures shall comprise:
(a) identifying the customer and verifying the customer's identity on the basis of documents, data or information obtained from a reliable and independent source;

Germany is applying Article 5 and adopting more stringent regulations. However, any country in the EU could adopt more stringent regulations, and it is not obvious why Germany would adopt more stringent regulations and, thereby perhaps hamper the very large car sales branch, if other nations were not implementing such adoptions.

Regarding e-money; EU's legislative view on electronic money is set out in the Directive 2009/110/EC of the European Parliament and of the Council of 16 September 2009 (on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending). This specifically states that electronic money must be redeemable by the issuer.

However, regulations pertaining to “Paysafecard” are subsequent to the Directive 2007/64/EC of the European Parliament and of the Council of 13 November 2007 on payment services in the internal market; which states:

TITLE II

PAYMENT SERVICE PROVIDERS

(f) a description of the internal control mechanisms which the applicant has established in order to comply with obligations in relation to money laundering and terrorist financing under Directive 2005/60/EC and Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers of funds [25];

TITLE III

TRANSPARENCY OF CONDITIONS AND INFORMATION REQUIREMENTS FOR PAYMENT SERVICES

Article 33

Burden of proof on information requirements

Member States may stipulate that the burden of proof shall lie with the payment service provider (payment service provider is defined as: execution of payment transactions through a payment card or a similar device; Annex, Payment Services, 3) to prove that it has complied with the information requirements set out in this Title.

Article 34

Derogation from information requirements for low-value payment instruments and electronic money

1. In cases of payment instruments which, according to the framework contract, concern only individual payment transactions that do not exceed EUR 30 or that either have a spending limit of EUR 150 or store funds that do not exceed EUR 150 at any time:

I have not yet fully comprehended this Directive, although as this Directive pertains to “Paysafecard”, and there is a limit of EUR 30 of which the scope of the Directive does not apply, I am under the impression that the German regulation is applying this Directive, maybe also in accordance with Article 8 of the money laundering act, which would thus require require customer identification.

[Forp]

Well, there are lots of places where you usually don't have to identify yourself upon payment.

And it is exactly this possibility which will be outlawed.

Granted, these are surely not the main use-cases for such forms of payment but it's still sad to see that given such legislation, we will never advance beyond having to carry around coins to pay for coffee unless you are willing to officially link each and every coffee you drink to your identity.

You will, very conveniently, pay with your credit card or your mobile phone. Every single of your purchasing acts WILL be linked to your identity. This WILL be the basis of state-wide data mining. This data mining operation WILL be, of course, restricted to fighting terrorism (for all other applications, information security laws will be in place, at least in theory). If your are against this type of data mining you ARE promoting terrorism, which will carry a penalty of 10 years minimum.

Something about the direction this seems to be heading starts worrying me...

Starts???

Have you been sleeping for the last 15 years? In this case: Good morning!!

Did you ever have a class in history? Every 80 - 120 years humanity produced a really big mess-up. We are right in the middle of the process of preparing the next one. It will be connected with privacy and data mining.

[foggyb]

Next up: a ban on thinking about bitcoins. Any thoughts of bitcoins are punishable. Law is retroactive. Don't even think about it!

[relative]

am I missing something or is this law, applied to bitcoin, only relevant to bitcoin exchanges?

so what's the big deal? did you really expect govts will let you move big money into a bitcoin exchange without identification?

I think that only the 1000 EUR limit applies, since transferring funds to a bitcoin exchange is a wire transaction.
I guess they have no limit on stuff like paysafecards because you could buy them in bulk and circumvent the limit.

IIUC it doesnt require identification for a bitcoin-to-bitcoin transaction.

[dennis_sweden]

am I missing something or is this law, applied to bitcoin, only relevant to bitcoin exchanges?

so what's the big deal? did you really expect govts will let you move big money into a bitcoin exchange without identification?

I think that only the 1000 EUR limit applies, since transferring funds to a bitcoin exchange is a wire transaction.
I guess they have no limit on stuff like paysafecards because you could buy them in bulk and circumvent the limit.

IIUC it doesnt require identification for a bitcoin-to-bitcoin transaction.

If by bitcoin-to-bitcoin transcation you mean two indivduals and not a "payment serice provider" or exchange/or any kind of "paypal" service, then you are correct.

[FlipPro]

To bad Bitcoin is not really "anonymous". To bad it's not money "laundering" either.

[relative]

To bad Bitcoin is not really "anonymous". To bad it's not money "laundering" either.

let's revisit that claim when the 250kBTC thief is caught.

[FlipPro]

To bad Bitcoin is not really "anonymous". To bad it's not money "laundering" either.

let's revisit that claim when the 250kBTC thief is caught.

If enough resources were put into catching him, it would be absolutely possible.

[dennis_sweden]

To bad Bitcoin is not really "anonymous". To bad it's not money "laundering" either.

let's revisit that claim when the 250kBTC thief is caught.

If enough resources were put into catching him, it would be absolutely possible.

Have I missed something - is there proof that 250k Btc was stolen during the hack against Mtgox? I know somebody suggested that the amount of Btc that Mtgox should have had was substantially more than 424k, but that was the last I heard.