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Author Topic: What is the real deal with AML laws?  (Read 1600 times)
mishrahsigni
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November 27, 2013, 02:28:05 AM
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It seems that only MtGox actually enforces them.  Are they now a PSP or bank?

MtGox says the reason they prohibit wallet-to-wallet bitcoin transfers (yes, they are prohibiting for unverified accounts now - even if you put your coins in there long ago) is because of the AML laws... yet, no other wallet site (that I know of or use) has this restriction, as they all allow me to transfer bitcoins to another address without the need to verification.

So, either MtGox is making up it's own AML rules, or none of the other sites, like Blockchain, for example, are following them.

Does any know what the real deal is with these AML laws?  it is all kept very secret.  In fact, the AML laws require that the exchange NOT notify the users in advance before the exchange put in place any new restrictions or limits...but only AFTER they are in place.

The real question is... where can I read the AML laws, specifically on how they apply to bitcoins? (although I still find it hard to believe they even Do apply for wallet-to-wallet transaction... but that is what I am told by MtGox)
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TheChinaMan
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November 27, 2013, 05:48:51 AM
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Sorry I may be reaching here. I think AML policies are no secrets. You can google it. A nations economy is sensitive to the amount of its currency entering and leaving its boarders. It's a slow and quiet battle but there is such thing as economic warfare which has been going on for decades.

I'm a newb. I could be completely wrong about my ideas. I believe that MtGox is under the scope right now due to US Authorities going after financial institutions that are possibly doing business with organized crime.

Adam Szubin, director of the U.S. Department of the Treasury’s Office of Foreign Assets Control. Acting under the U.S. executive order, ... Szubin says. Targeting individual gang members won’t result in big seizures, because “there aren’t just large sitting accounts out there with the name” on them, so the department is working to blacklist companies and individuals that hold, move, or launder funds for the syndicates, he says.

http://mobile.businessweek.com/articles/2013-11-07/japan-attacks-yakuza-crime-syndicates-via-banking-system

So I think MtGox/Japan is doing everything to comply so they can stay afloat.

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franky1
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November 27, 2013, 07:02:35 AM
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It seems that only MtGox actually enforces them.  Are they now a PSP or bank?

MtGox says the reason they prohibit wallet-to-wallet bitcoin transfers (yes, they are prohibiting for unverified accounts now - even if you put your coins in there long ago) is because of the AML laws... yet, no other wallet site (that I know of or use) has this restriction, as they all allow me to transfer bitcoins to another address without the need to verification.

So, either MtGox is making up it's own AML rules, or none of the other sites, like Blockchain, for example, are following them.

Does any know what the real deal is with these AML laws?  it is all kept very secret.  In fact, the AML laws require that the exchange NOT notify the users in advance before the exchange put in place any new restrictions or limits...but only AFTER they are in place.

The real question is... where can I read the AML laws, specifically on how they apply to bitcoins? (although I still find it hard to believe they even Do apply for wallet-to-wallet transaction... but that is what I am told by MtGox)

alot of businesses dont know the AML regulations. so sometimes they go overboard whenforming their own business policies and practices.
AML laws are about reducing the risk of money laundering. a sub section of this, which helps prevent criminals get identified is the KYC (know your customer).

AML regulations only apply to the FIAT side legally. the regulations of most countries are roughly $1000 in a short period of time being deposited or withdrawn or $10k a year, giving businesses the abilitiy to tailor their own policies to reduce the risk of serious criminal activity occuring. but some businesses go overboard in regards to their own risk management handbook/policies.
EG bitinstant use to have a $500 limit, some other exchanges only allowed a $50 a day limit.

businesses cannot lock out a customer from their funds, or cause undue stress or delay but they refuse certain services to customers that do not wish to comply to their policies. EG having the withdraw/deposit fiat buttons disabled unless KYC details are verified.

i have no clue why MTGOX are messing with bitcoin features. but its MTGOX's policy of risk management, its not the government authorities regulation to do this.

it may be to prevent EG:
customer A depositing FIAT from USA BANK, converting to BTC to the give to customer B via MTGOX codes who converts it to FIAT to then put into a swiss account on behalf of customer A(laundering/tax evasion). but seeing as customer A and customer B should be KYC checked with their fiat withdrawals or deposits. i see no reason to hinder bitcoin services. all mtgox needs to do is log all internal transactions, in case one of the customers does flag up as a known link to serious crime. it would show the logs.

to me i think MTGOX whole system is lacking in many features and security. so i dont trade with them. i prefer other exchanges that seem to be more understanging of fiat regulations and underatnding how to be compliant without distrupting customers lives

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mishrahsigni
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November 27, 2013, 12:05:11 PM
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businesses cannot lock out a customer from their funds, or cause undue stress or delay but they refuse certain services to customers that do not wish to comply to their policies. EG having the withdraw/deposit fiat buttons disabled unless KYC details are verified.

I think what you meant to say is "businesses SHOULD not lock out a customer"... because obviously they can, and there is nothing anyone can do about it.  I know one case where MtGox's locking a man out of his account is causing severe stress... He is an older man, US citizen, has 7 stents (valves in heart), living off-the-grid in south America for 7 years, and was paying his healthcare, rent,  buying food with bitcoins.  Now he has no money, and therefore no access to rent, healthcare or food.  But MtGox stands my their "you need to validate yourself", and has so far, not accepted the documentation he has sent in (because he has no permanent address or apostille sealed document less than 6 months old)

If you stand by your "cannot" statement, then, when MtGox's policies actually DO lock someone out, who does one call to remedy this (I mean besides MtGox, who does nothing).?  Is there any kind of oversight group that monitors/regulates these exchanges?  Becaus  the way it is now, the client is the last voice to be heard. 
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November 27, 2013, 01:36:44 PM
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Anti Money Laundering (AML) regulations are here to stay. These have become a usual and normal way of conducting financial affairs, thanks to a whole plethora of international multilateral and bilateral treaties and conventions.

Ostensibly designed to stop proceeds of terrorism or drug crimes from being laundered, AML rules are now being increasingly used to police commercial transactions in order to detect tax evasion.

For any organisation which is in the regulated financial markets - in other words any entity that deals with money on behalf of its customers or clients - the licensing and regulatory requirements are mandatory. In their simplest form, the entity is required to fulfil Know-Your-Customer (KYC) norms. The entity must itself conduct these checks, which generally take the form of obtaining authenticated copies of the clients' identity documents. There are lists of documents which are acceptable - generally passports, driving licenses, utility bills etc.

The purpose of this is to tie the money / account to a physical person and an address where the person can be located.

The next AML requirement is generally that whenever a regulated financial entity (or a banker, money changer etc.) sees a transaction which he suspects might be fraudulent or an attempt to launder funds, he is required to report the transaction to the financial regulator immediately. A lot of organisations file Suspicious Activity Reports automatically for almost every transaction.

Depending upon the local laws / regime, the organisation or entity might be able to use / deal with that money n number of days after having filed the SAR; alternatively have to wait for specific clearance. In the first case, the organisation having alerted the regulator is deemed to have obtained approval if it does not hear anything adverse from the regulator within the stipulated time.

Why do organisations like MtGox etc. behave in a paranoid manner? Simple. The company and each of its employees risks personal criminal prosecution if they violate AML rules.

Given the relatively anonymous and risky (from the law enforcer's point of view) nature of bitcoins, organisations like Mt.Gox are understandably paranoid and eager to "over-comply" with AML regimes.

Of course, there are companies which have relatively lax AML procedures. These companies either operate in countries / jurisdictions which have relatively lighter AML restrictions and few international obligations; or are simply benefiting from a lazy regulator.

I am happy to answer any questions or concerns.
TheChinaMan
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November 28, 2013, 07:36:01 PM
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MtGox use Mizuho Bank to process all international wire transfers. The US Treasury Department has been scrutinizing their grey accounts and lately have applied more pressure. Due to the pressure they must be in compliance for Mizuho Bank to conduct business with them.

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jballs
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November 29, 2013, 02:28:25 AM
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Mostly what TheBlackAdder says is correct, although I like the idea that AML laws are NOT here to stay, but that is an ideological matter and he/she is probably correct for the forseeable future.

One point I would clarify:

Quote
The next AML requirement is generally that whenever a regulated financial entity (or a banker, money changer etc.) sees a transaction which he suspects might be fraudulent or an attempt to launder funds, he is required to report the transaction to the financial regulator immediately. A lot of organisations file Suspicious Activity Reports automatically for almost every transaction.

I don't believe this is true in the US. I was AML certified for institutional brokerage for many years. I never filed an SAR. I never would have, short of a colombian showing up with a suitcase full of cash or something colossally obvious. But even then I would just refuse the business to keep myself out of trouble. I believe it is clear to all that the banks, the cartels, and the various justice/law enforcement systems in place only keep drug laws in place to control the racket for themselves. This does much more harm than good for society and is a paradigm we need to collectively outgrow. None of my colleagues believed in filing SAR's either, they would just refuse business that would warrant such a thing, if it ever had arisen.

The irony, if I were laundering money, I would have filed an SAR on everyone I ever talked to, to make sure the regulators were so sick of pulling up little old ladies' financial stats that they hit the ignore button on my file. Probably the best way to obscure laundering is to deluge regulators with frivolous SARs. Maybe legit companies are doing this just as a CYA, in which case more power to them as well. It is very subjective, if a 20-something kid ran a 5-figure transaction that could be deemed suspicious activity for sure. But I don't think that is the case for most firms, they have enough mandatory regulations to bother with more, and as HSBC proved, and NYSE Chairman DeGrasso meeting with FARC out in the jungle a decade prior, the very largest firms skirt AML intentionally because it's a massive profit center.

As for MtGox and the OP, simple answer is size. MtGox at this point is running billions of USD equivalent in volume. The more money is involved, the more a regulator is concerned with potential AML issues, for obvious reasons. MtGox and BTC values are now big enough to be relevant for major transfers of wealth and thus they have to abide. The first 7-figure international wires to bank accounts would have triggered regulatory interest, for all the reasons TheBlackAdder mentioned.

Smaller firms are in theory subject to the same rules, but there is no enforcement and probably collective ignorance of the laws by their proprietors (or they are in a bank secrecy jurisdiction where there are no regulators).

The upside, it adds legitimacy to any exchange to be regulated and transparent as possible, as knowing that they ARE being scrutinized diminishes the likelihood of unscrupulous accounting, etc. In theory/perception at least. It's not necessarily a bad thing, depends on the regulators and laws applied.
Scitoshi
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February 02, 2015, 03:11:11 AM
 #8

AML can be easily regulated at the exchange platform levels or merchandiser levels.

However, this cannot stop anyone obtaining BTC through mining, and send the minted BTC to support illegal activities.

I think the only solution is that all coin users' addresses must be linked to a verified personal ID.

However, the key question is ... Will there be anyone interested in giving up his/her real personal ID for using a cryptocurrency?

That comes to a point how to create incentive for people to be a registered user and submit his/her personal ID.

On one hand, our team has tried to solve this problem by creating a novel in-built anti-money laundering feature into Aten Coin (also called Black Gold Coin or AtenCoin).

On other hand, for incentive, we have invested in the Oil and Gas production project. We will then offer a Bonus and Reward program (about 1% monthly interest, i.e., ~12.7 annual interest). Hopefully such program can create incentive to attract people to submit his/her personal ID to become an Aten Coin user.

Aten, Ancient Egyptian Sun God, emits Rays reaching Human Hands.
Under illumination of Aten Coin, there will be no more Darkness in Cryptocurrency!
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