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Author Topic: [2019-06-21] FATF: "37 Global Crypto Exchanges Must Now Share Customer Data"  (Read 515 times)
mich (OP)
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June 21, 2019, 04:19:47 PM
Last edit: February 22, 2020, 10:27:23 AM by mich
 #1

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.  

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June 21, 2019, 05:21:36 PM
 #2

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.

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June 21, 2019, 07:08:51 PM
 #3

Quote
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.

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 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.

It's not just the US. In fact, all the G20 countries already publicly affirmed their commitment to implementing these rules. The 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.

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June 21, 2019, 07:38:13 PM
 #4

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

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June 21, 2019, 07:46:15 PM
 #5

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 are the world pariah states who are constantly the victims of economic sanctions and political threats from world superpowers.

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June 22, 2019, 09:02:32 AM
 #6

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.

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June 22, 2019, 09:07:26 AM
 #7

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.

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June 22, 2019, 09:19:11 AM
 #8

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.

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June 22, 2019, 11:43:41 AM
 #9

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.

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

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.

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June 22, 2019, 08:26:15 PM
 #10

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.

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 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.

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

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June 22, 2019, 09:27:01 PM
 #11

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.

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June 22, 2019, 11:54:29 PM
Merited by vapourminer (1)
 #12

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.
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.

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June 23, 2019, 01:32:39 AM
 #13

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.
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June 23, 2019, 03:51:16 AM
 #14

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.

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June 23, 2019, 05:19:29 AM
 #15

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.

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June 23, 2019, 10:17:56 AM
 #16

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 Angry

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

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June 23, 2019, 12:55:07 PM
 #17

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.


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June 23, 2019, 01:45:14 PM
 #18

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.

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June 23, 2019, 03:06:35 PM
 #19

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.

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

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June 23, 2019, 07:02:13 PM
Merited by gentlemand (1)
 #20

On second thought, the FATF is probably not as effective as I originally assumed. According to this 2017 report, 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:

Quote
As of April 2017, the level of country compliance with the FATF 40 recommendations rests at just 25 per cent across the 30 countries most recently assessed. While this is definitely an improvement since 2011, when full compliance across 160 countries was at 12.3 per cent, taking 27 years since the standards were introduced to get to a 25 per cent compliance level cannot exactly be called rapid progress. 

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

Quote
[A]reas where the majority of countries are rated “partially compliant” or “non-compliant” include requiring firms to carry out due diligence in non-financial fields such as real estate, law and accounting (Recommendation 22 – 63 per cent of countries rated either partially or non-compliant) and making sure the authorities can identify the real owners of corporations to avoid the abuse of anonymous shell companies (Recommendation 24 – 73 per cent of 30 countries rated partially or non-compliant). 

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.

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