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Author Topic: New Anti-Money Laundering Rules Apply to Gift Cards  (Read 3615 times)
Baltar
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February 11, 2012, 06:06:54 AM
 #1


Wonder when Bitcoin transactions will have to be reported to FinCEN.

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If you issue gift cards to customers, you may subject to new anti-money laundering rules issued by Treasury agency FinCEN.

“The law enforcement agencies that report to FinCEN have highlighted the use of gift cards in money laundering for some time,” JVC president and CEO Cecilia Gardner tells JCK.

The new rules, which go into effect on March 31, require retailers who issue store cards for $2,000 or more to take precautions to ensure these products are not being used to launder money. These precautions include gathering customer identification information, maintaining records of the transactions, and implementing an anti-money laundering program.

The rules also apply to retailers whose cards can be used in outside stores, of if they issue cards to a customer in the amount of $10,000 or more in one day.

Retailers who issue gift cards in the amount of $2,000 or less do not have to comply, unless this card can be used internationally or reloaded remotely.

Retailers must also report any suspicious activity using an IRS form called a “Suspicious Activity Report.” 

http://www.jckonline.com/2012/02/10/new-anti-money-laundering-rules-apply-to-gift-cards

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foggyb
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February 11, 2012, 05:35:24 PM
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Retailers must also report any suspicious activity using an IRS form called a “Suspicious Activity Report.”  


Fill one out and list all IRS activities as "suspicious activity".

"I saw something so I said something".
notme
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February 11, 2012, 08:21:25 PM
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Retailers must also report any suspicious activity using an IRS form called a “Suspicious Activity Report.”  


Fill one out and list all IRS activities as "suspicious activity".

"I saw something so I said something".

+1

https://www.bitcoin.org/bitcoin.pdf
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12jh3odyAAaR2XedPKZNCR4X4sebuotQzN
DeathAndTaxes
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February 11, 2012, 08:53:22 PM
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I had a lawyer draft a letter to the Treasury on the applicability of the "money services business" regulation as it related to "Bitcoin stored value cards".

Given that FinCEC considers any stored value (to include things like prepaid phonetime) card to be covered by the regs I expect they will state the same about Bitcoin.
elrodvoss
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February 12, 2012, 04:00:02 AM
 #5

This is not something new.  I work in a retail office supply store and over 6 months ago we got a new policy and form that states that any gift card purchases over $2,000 would need to fill out a IRS form.

Basically its a stop gap for money laundering.

 

Jeremy West spendbitcoins.com
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February 12, 2012, 05:33:22 AM
 #6

Looks like we're good for transactions of $2000 or less.

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February 12, 2012, 06:37:53 AM
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Looks like we're good for transactions of $2000 or less.
And there you have it.

Want to send large sums of money through Bitcoin while avoiding IRS tracking?  Just gather X/2000 of addresses from the receiver (where X equals total $ worth of Bitcoins sent), and use sendmany to split up the total BTC.  Wink
DeathAndTaxes
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Gerald Davis


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February 12, 2012, 02:43:05 PM
 #8

The US Treasury defines "open loop" and "closed loop" systems.  The $2000 excluion only applies to "closed loop" systems.  I am waiting for an official response but I doubt they would define Bitcoin as a closed loop system.

Quote
1.   What types of prepaid access arrangements are covered under the Rule?

The Rule defines a “prepaid program” as “an arrangement of one or more persons acting together to provide prepaid access.” Prepaid access arrangements can vary greatly, ranging from travel programs to university campus programs to public transportation programs and many others, all with specific features and characteristics targeted to different audiences and activities. The Rule details types of activities that would and would not subject a specific prepaid access arrangement to BSA requirements. The Rule excludes certain low-risk prepaid access arrangements from being subject to regulation.

Three types of prepaid access arrangements are excluded from the definition of a prepaid program under the Rule, those that: 1) provide closed loop prepaid access to funds not to exceed $2,000 maximum value on any day; 2) provide prepaid access solely to funds provided by a government agency; or 3) provide prepaid access solely to funds from certain pre-tax flexible spending arrangements for health care or dependent care expenses, or from Health Reimbursement Arrangements for health care expenses.

There are two types of prepaid access arrangements that have a qualified exclusion but that, if they can be used in any of three particular capacities, are not entitled to that exclusion and are therefore prepaid programs subject to regulation. The rationale is that the expanded capacities may obscure financial transparency. Open loop prepaid access that does not exceed $1,000 maximum value on any day, and prepaid access to employment benefits, incentives, wages or salaries (”payroll”), are not prepaid programs subject to BSA regulatory requirements so long as the prepaid access cannot (1) be used internationally, (2) allow transfers of value from person to person within the arrangement, or (3) be reloaded from a non-depository source. If any one of these features is part of the arrangement, it will be a covered as a prepaid program under the Rule.

Given Bitcoin fails all 3 tests I believe anyone selling Bitcoins would fall under FinCEN BSA requirements.  Someone purchasing Bitcoins to sell closed loop giftcards likely don't unless the transaction is >$2000 daily.

http://www.fincen.gov/news_room/nr/html/20111102.html

BurtW
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February 12, 2012, 02:50:11 PM
 #9

Looks like we're good for transactions of $2000 or less.
And there you have it.

Want to send large sums of money through Bitcoin while avoiding IRS tracking?  Just gather X/2000 of addresses from the receiver (where X equals total $ worth of Bitcoins sent), and use sendmany to split up the total BTC.  Wink
The IRS calls this a structured transaction and would consider it one transaction (once they figure out what you are doing - which they eventually will).

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
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February 12, 2012, 02:55:35 PM
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Want to send large sums of money through Bitcoin while avoiding IRS tracking?  Just gather X/2000 of addresses from the receiver (where X equals total $ worth of Bitcoins sent), and use sendmany to split up the total BTC.  Wink
The IRS calls this "structuring", and will come down on you like a hammer if they catch you at it.
BurtW
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February 12, 2012, 04:35:01 PM
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What I said  Grin

Our family was terrorized by Homeland Security.  Read all about it here:  http://www.jmwagner.com/ and http://www.burtw.com/  Any donations to help us recover from the $300,000 in legal fees and forced donations to the Federal Asset Forfeiture slush fund are greatly appreciated!
finway
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February 12, 2012, 05:52:19 PM
 #12

WTF, are banks mad?

SgtSpike
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February 13, 2012, 05:38:37 AM
 #13

Looks like we're good for transactions of $2000 or less.
And there you have it.

Want to send large sums of money through Bitcoin while avoiding IRS tracking?  Just gather X/2000 of addresses from the receiver (where X equals total $ worth of Bitcoins sent), and use sendmany to split up the total BTC.  Wink
The IRS calls this a structured transaction and would consider it one transaction (once they figure out what you are doing - which they eventually will).
Haha, apparently I am not well-versed enough in the world of criminal enterprising then!
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