# Irish banks, Bitcoin and Anti money laundering rules



## Leo

TheBigShort said:


> My understanding of bitcoin is that it stands outside of the 'regulated' financial system and uses the blockchain technology to provide  trustless transactions - i.e it doesn't need regulation.



Yep, where the issues arise is in transferring money into or attempting to take it out of Bitcoin. Those transactions need to comply with whatever anti-money laundering legislation is in place in the local market, and that's causing some problems now. Also, US regulations cover the operation and management of crypto exchanges as evidenced in the Silk Road take down. So while money already in Bitcoin can move regulation free, putting it in, or getting it out is facing increasing hurdles.


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## TheBigShort

Leo said:


> So while money already in Bitcoin can move regulation free, putting it in, or getting it out is facing increasing hurdles.



I cant imagine the hurdles to be too arduous? I mean, we are living in the free world arent we? I use Coinbase, which to my understanding, is fully compliant with US regulations. I also use Ulsterbank, so any funds withdrawn to, or from, Coinbase to UB are wholly traceable. 

The drama continues....price is tanking. If it goes below €3,000 I can start sweating, below €2,000, panic.


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## Leo

TheBigShort said:


> I cant imagine the hurdles to be too arduous? I mean, we are living in the free world arent we? I use Coinbase, which to my understanding, is fully compliant with US regulations. I also use Ulsterbank, so any funds withdrawn to, or from, Coinbase to UB are wholly traceable.



The challenge is with the audit trail to that point. Likely won't be a challenge for all, but for anyone who obtains bitcoin through trading activities, proving the source is legit and not on any of the blacklisted organisations or nation states will be a challenge.


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## Leo

Looks to have bounced a little for now, so while the immediate panic might be over for now it'd be interesting to see if anyone dealing with the Irish banks is facing any problems.


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## TheBigShort

Leo said:


> The challenge is with the audit trail to that point. Likely won't be a challenge for all, but for anyone who obtains bitcoin through trading activities, proving the source is legit and not on any of the blacklisted organisations or nation states will be a challenge.



I still not convinced. The whole concept is that it based on open source ledger that is viewable to all.
If I sell 1kg of cocaine* for €5,000 cash and another 1kg for 1BTC, what is the difference if I deposit the cash and the proceeds of the sale of BTC? 

*I have no idea what the price of cocaine is, in case anyone is wondering.


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## Leo

TheBigShort said:


> I still not convinced. The whole concept is that it based on open source ledger that is viewable to all.
> If I sell 1kg of cocaine* for €5,000 cash and another 1kg for 1BTC, what is the difference if I deposit the cash and the proceeds of the sale of BTC?



In either case, if the transaction amounts exceed anti-money laundering triggers, you have to satisfy the authorities that the money came from a legitinate, non-black-listed source. In the case of cashing out of Bitcoin, while the ledger is open, how does a bank satisfy their requirements in terms of the identies of the individuals behind the transactions?


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## TheBigShort

Leo said:


> In either case, if the transaction amounts exceed anti-money laundering triggers, you have to satisfy the authorities that the money came from a legitinate, non-black-listed source. In the case of cashing out of Bitcoin, while the ledger is open, how does a bank satisfy their requirements in terms of the identies of the individuals behind the transactions?



Not really, BTC is not an illegal asset. If I sell a car for €20,000 cash and 1BTC for €20,000 on coinbase and deposit both sums in a bank I simply show proof of both transactions. 
The fact that the €20,000 cash proceeds for the car or 1BTC were illicitly got, or not, by the buyer, shouldnt be of concern for me.


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## Leo

TheBigShort said:


> Not really, BTC is not an illegal asset. If I sell a car for €20,000 cash and 1BTC for €20,000 on coinbase and deposit both sums in a bank I simply show proof of both transactions.
> The fact that the €20,000 cash proceeds for the car or 1BTC were illicitly got, or not, by the buyer, shouldnt be of concern for me.



I'm not suggesting Bitcoin is illegal, and I called out it'll most likely only affect people who are cashing out bitcoin they obtained through trading (i.e., not investing, holding, selling at a profit via the same platform), but anti-money laundering requirements have become a lot more stringent in recent years. If you sell your car for €20k and lodge it in your local bank, they have an obligation to satisfy themselves that your story is accurate and the source of the cash isn't illicit. You can read the requirements applying to Irish entities here. 

In many jurisdictions financial institutions then have additional requirements to ensure they are not in any way dealing with companies or individuals associated with blacklisted countries, companies, orgainisations or individuals (Cuba, Syria, Iran, North Korean, etc. in the US for example).


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## TheBigShort

Leo said:


> If you sell your car for €20k and lodge it in your local bank, they have an obligation to satisfy themselves that your story is accurate and the source of the cash isn't illicit. You can read the requirements applying to Irish entities here.



I know. They can check who the vehicle is registered too, the make, model, mileage etc if they want. Then assess if €20,000 is fair and reasonable etc.
Ditto bitcoin. They can see when and how much funds left my UB account to Coinbase.
They can see how and when funds transferred from coinbase to UB. They can calculate any capital gains and make an assessment.
I really dont see what the issue is?


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## RETIRED2017

TheBigShort said:


> I know. They can check who the vehicle is registered too, the make, model, mileage etc if they want. Then assess if €20,000 is fair and reasonable etc.
> Ditto bitcoin. They can see when and how much funds left my UB account to Coinbase.
> They can see how and when funds transferred from coinbase to UB. They can calculate any capital gains and make an assessment.
> I really dont see what the issue is?


Yes but some of your gains may be the result of money laundering which you have no control over or approve off,


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## TheBigShort

RETIRED2017 said:


> Yes but some of your gains may be the result of money laundering which you have no control over or approve off,



But the €20,000 cash for the car may have been as a result of a drug deal?


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## RETIRED2017

TheBigShort said:


> But the €20,000 cash for the car may have been as a result of a drug deal?


It is possible to check the real value of the  E20000  car ,


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## TheBigShort

RETIRED2017 said:


> It is possible to check the real value of the  E20000  car ,



???

If I walk into a bank with €20k in cash they will probably want to know the source of it. If I deposit €20K from coinbase,  they _already know _its source.
Large amounts of cash is more likely to raise alerts than the proceeds of selling crypto from Coinbase as those proceeds will be recorded electronically.


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## MrEarl

RETIRED2017 said:


> Yes but some of your gains may be the result of money laundering which you have no control over or approve off,



But isn't that risk the same in the "real world" ?

A night in a casino somewhere in Ireland could find one of us in the exact same situatiton.

Ultimately, if criminals want to defraud you then they will find a way, and so on.... it's the game of cat and mouse that has gone on for hundreds, if not thousands, of years.


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## Leo

TheBigShort said:


> They can see how and when funds transferred from coinbase to UB. They can calculate any capital gains and make an assessment.
> I really dont see what the issue is?



Seriously? I've said twice now that it applies to those who obtain bitcoin through trading, not buying to speculate.



Leo said:


> I called out it'll most likely only affect people who are cashing out bitcoin they obtained through trading (i.e., not investing, holding, selling at a profit via the same platform)


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## TheBigShort

Leo said:


> Seriously? I've said twice now that it applies to those who obtain bitcoin through trading, not buying to speculate.



Excuse my ignorance, but I just dont get the issue? You mentioned "people who are cashing out", how do people "cash out" of bitcoin?


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## Leo

TheBigShort said:


> Excuse my ignorance, but I just dont get the issue? You mentioned "people who are cashing out", how do people "cash out" of bitcoin?



You convert your bitcoin into a conventional currency. Via Coinbase as an .


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## RETIRED2017

MrEarl said:


> But isn't that risk the same in the "real world" ?
> 
> A night in a casino somewhere in Ireland could find one of us in the exact same situatiton.
> 
> Ultimately, if criminals want to defraud you then they will find a way, and so on.... it's the game of cat and mouse that has gone on for hundreds, if not thousands, of years.


I agree just hope the criminals have not came across a very  'rich seam'


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## TheBigShort

Leo said:


> You convert your bitcoin into a conventional currency. Via Coinbase as an .



Yes, I have already highlighted coinbase. What odds? Coinbase is, to the best of my knowledge, compliant with all regulatory requirements in the US. 
Why is depositing cash proceeds into coinbase an issue, as opposed to say an Irish bank?


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## RETIRED2017

TheBigShort said:


> Yes, I have already highlighted coinbase. What odds? Coinbase is, to the best of my knowledge, compliant with all regulatory requirements in the US.
> Why is depositing cash proceeds into coinbase an issue, as opposed to say an Irish bank?


I see There are reports EU is set to create new regulations any thoughts on the subject,


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## TheBigShort

RETIRED2017 said:


> I see There are reports EU is set to create new regulations any thoughts on the subject,



Do you have a link?


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## RETIRED2017

TheBigShort said:


> Do you have a link?


Sorry I am not in a position to link it to this forum,It you Google daily express eu bitcoin you will find it,
TheBigShort can you do a link please
The express has some interesting views on bitcoin right now,,


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## Leo

TheBigShort said:


> Yes, I have already highlighted coinbase. What odds? Coinbase is, to the best of my knowledge, compliant with all regulatory requirements in the US.
> Why is depositing cash proceeds into coinbase an issue, as opposed to say an Irish bank?



Out!! Cashing out means taking it out...


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## Leo

TheBigShort said:


> Do you have a link?



Recent Reuters article, has been under review for a number of years though.


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## TheBigShort

Leo said:


> Out!! Cashing out means taking it out...



Yes I know. Like I have explained to you already, if I sell 1BTC the cash amount is deposited into coinbase a/c electronically. I then withdraw that amount to my bank account, electronically. Its all date and time stamped and under jurisdiction of authorities if they want to examine my accounts.


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## TheBigShort

Leo said:


> Recent Reuters article, has been under review for a number of years though.



Yes, and from what Ive read of those links, the ECB is more or less 'monitoring' the situation. 
Risks with cryptocurrencies are identified, as is potential usages of cryptocurrency in the future.
What gives?


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## Leo

TheBigShort said:


> Yes I know. Like I have explained to you already, if I sell 1BTC the cash amount is deposited into coinbase a/c electronically. I then withdraw that amount to my bank account, electronically. Its all date and time stamped and under jurisdiction of authorities if they want to examine my accounts.



And as I've been trying to point out, money coming out of Coinbase does not necessarily satisfy the obligations of the financial institutions to identify themselves as to the original source of that money.  In perhaps a more extreme example, if your bank uses Commerzbank for SEPA processing, your request to transfer funds from Coinbase to your bank account will be refused regardless of whether the amount triggers the more onerous anti money laundering requirements.


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## TheBigShort

Is this the same Commerzbank that was fined €1.5bn for money-laundering, _before _bitcoin was even created?

https://www.rt.com/business/240353-commerzbank-billion-fine-sanctions/


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## Leo

TheBigShort said:


> What gives?



Defensive much?

Just trying to be helpful pointed to current & previous reports, I didn't suggest regulation was imminent. European volumes lag that of other markets, and in the grand scheme of it are still small money, so I don't think they see it as that high a priority.


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## Leo

TheBigShort said:


> Is this the same Commerzbank that was fined €1.5bn for money-laundering, _before _bitcoin was even created?
> 
> https://www.rt.com/business/240353-commerzbank-billion-fine-sanctions/



Yes, and that's not the only money-laundering activity they were hit for either. An attempt to clean up their reputation and the difficulty in meeting their AML requirements for bitcoin transactions is behind their decision to stop processing crypto payments.


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## TheBigShort

Leo said:


> Defensive much?
> 
> Just trying to be helpful pointed to current & previous reports, I didn't suggest regulation was imminent. European volumes lag that of other markets, and in the grand scheme of it are still small money, so I don't think they see it as that high a priority.



Thanks for your help.

But im at a loss as to how, or why, stringent anti-money laundering regulations should be of concern to holders of bitcoin.


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## TheBigShort

Leo said:


> Yes, and that's not the only money-laundering activity they were hit for either. An attempt to clean up their reputation and the difficulty in meeting their AML requirements for bitcoin transactions is behind their decision to stop processing crypto payments.



Have you got a link for that? It appears this banks right hand doesnt know what the left hand is doing and needs to gets its act together, more than any real concern about coinbase.


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## Leo

TheBigShort said:


> Thanks for your help.
> 
> But im at a loss as to how, or why, stringent anti-money laundering regulations should be of concern to holders of bitcoin.



ECB or other central banks introducing further regulation and already existing AML legislation aren't quite the same thing. If you're back on AML, again, for those who bought as a means of speculation, there will be little to worry about, but for those involved in trading they will likely to face problems cashing out as they are unable to satisfy proof of the source of the funds. If Bitcoin is to be a successful currency and not simply a speculation tool, then people are going to be carrying out transactions, right? If they then go to cash out the proceeds of these transactions, that's when AML comes into play.


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## Leo

TheBigShort said:


> Have you got a link for that?



Yep.



TheBigShort said:


> It appears this banks right hand doesnt know what the left hand is doing and needs to gets its act together, more than any real concern about coinbase.



Have you a link for that?


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## TheBigShort

Leo said:


> Yep.
> 
> 
> 
> Have you a link for that?



Funnily enough, its the same link you provided. 
I interpreted that article as Coinbase reacting to Nationwide because of its association with the money-laundering Commerzbank. 

Once Commerzbank adopted an internal policy not to deal with cryptos, despite appropriating the blockchain technology itself, it seems reasonable that coinbase would react accordingly. Especially given Commerzbanks track record.


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## TheBigShort

Leo said:


> those involved in trading they will likely to face problems cashing out as they are unable to satisfy proof of the source of the funds. If Bitcoin is to be a successful currency and not simply a speculation tool, then people are going to be carrying out transactions, right? If they then go to cash out the proceeds of these transactions, that's when AML comes



Im not so convinced. If im a trader and I buy and sell stock with BTC, I will have an inventory of that stock. A record of when I bought and sold, and for how much bitcoin.
They prevailing value of BTC at any given time can be easily sourced.
AML will only come into play if someone cant explain their holdings.


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## TheBigShort

Leo said:


> An attempt to clean up their reputation and the difficulty in meeting their AML requirements for bitcoin transactions is behind their decision to stop processing crypto payments.



This is clearly an issue with the bank, not bitcoin. The article states that some managers flagged problems with sanctioned transactions with countries like Iran, but the transactions occurred anyway. This is what I meant by the right-hand not knowing what the left-hand is doing. 
If the bank cannot meet it AML obligations it was a prudent move not to engage with cryptos until it is able to do so.
Coinbase seem wise to avoid anything to do with this bank.


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## Leo

TheBigShort said:


> Funnily enough, its the same link you provided.
> I interpreted that article as Coinbase reacting to Nationwide because of its association with the money-laundering Commerzbank.



You think Coinbase know, let alone audit who the correspondents are for each bank they deal with? The problem here isn't that Coinbase has decided that Nationwide or Commerzbank are bad and have decided t stop doing business with them, it's the other way around. Commerzbank started refusing crypto payments, that in turn hit Natiowide and then Coinbase. As each refused transaction Coinbase attempt attracts fees, their only option was to stop dealing with that bank.


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## Leo

TheBigShort said:


> This is clearly an issue with the bank, not bitcoin. The article states that some managers flagged problems with sanctioned transactions with countries like Iran, but the transactions occurred anyway.



That's just Commerzbank who have clearly had some serious governance issues, but other banks such as Metropolitan, and  have also stopped processing cryptos.


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## TheBigShort

Leo said:


> Commerzbank started refusing crypto payments, that in turn hit Natiowide and then Coinbase.



While accurate, it is simplification of what is stated in the article.

Attorney General Leslie Caldwell _"Commerzbank committed these crimes even though managers inside the bank raised red-flags about its sanction-violating practices.."
_
In other words, regardless of the existance of bitcoin or not, Commerzbank couldnt satisfy authorities of meeting its AML requirements.
If it cant manage that much in the ordinary course of its affairs, it is prudent that they dont engage in the crypto space while there is at a mininmum, a perceived threat of money laundering practices in that space.
Commerzbank did not fail AML because of bitcoin, it failed AML requirements because of its practices in the normal monetary fiat system.

As far as your other examples above, it appears a mixed bag. Australian government appears to have given green light for trading but banks are somewhat hostile.

At the end of the day, what we appear to be getting to is whether or not authorities will, or can, 'crackdown' on bitcoin?
The question is important as, as citizens in purportedly free and democratic societies, we should have the right to buy and sell what items, products and services we see fit, subject to their legality.
Any notions of banning bitcoin, or crypto, are way off the charts and in total contradiction to the concept of free societies. If we ban bitcoin, then what else?
On the other hand, the most likely outcome is to attempt to regulate, but even that will be problematic. Who will regulate it? In order for central banks to regulate it, then surely it will at a minimum have to be defined as a financial instrument? If not, what business has a central bank got regulating it anymore than it does tins of sardines?
If it is defined as a financial instrument it could of course be subject to rules and regulations within that system, but it remains to be seen if such rules and regulations will impede, hamper, or interfere adversely on its functioning as a financial instrument.


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## Leo

TheBigShort said:


> Attorney General Leslie Caldwell _"Commerzbank committed these crimes even though managers inside the bank raised red-flags about its sanction-violating practices.."_


_
_
Forget about their previous infractions, they're going back years are don't involve cryptos. No one suggested they were bitcoid related, so you're arguing a point that was never made. They, or at least some of their staff clearly chose to ignore their obligations in identifying the source of funds. That's a different matter. Their current attempts to clear up their reputation mean they are now perhaps going beyond the minimum required to comply.



TheBigShort said:


> As far as your other examples above, it appears a mixed bag. Australian government appears to have given green light for trading but banks are somewhat hostile.



Such is the nature of choosing a few examples there are others. I don't see evidence of hostility from the banks though, I think it would be fairer to say they are nervous and unsure how to proceed.



TheBigShort said:


> The question is important as, as citizens in purportedly free and democratic societies, we should have the right to buy and sell what items, products and services we see fit, subject to their legality.



That is absolutely correct, and I don't think anyone is suggesting it should be otherwise, the challenge that needs to be addressed here is how financial institutions can meet their AML and other obligations with cryptos, where these institutions are unable to trace the source of the money. As mentioned multiple times, this really should only be an issue for large transactions, but for some reason some banks are choosing to be more conservative and refuse crypto based transactions. That issue needs to be addressed. 



TheBigShort said:


> Any notions of banning bitcoin, or crypto, are way off the charts and in total contradiction to the concept of free societies. If we ban bitcoin, then what else?



I haven't seen anyone suggest that.


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## TheBigShort

Leo said:


> the challenge that needs to be addressed here is how financial institutions can meet their AML and other obligations with cryptos, where these institutions are unable to trace the source of the money



And as I have mentioned, cash deposits from exchanges are electronically recorded. So its source is easily traced. 
If I sell €1m of bitcoin and transfer that amount to Coinbase, I then deposit the €1m into Ulster bank. UB can trace its source - coinbase. Coinbase can trace its source, my bitcoin wallet address. Its me who will have identify the source of my bitcoin. Either I bought it on an exchange (easily identifiable) or I traded goods and services for it. If im a trader, I will have inventory records of goods bought and sold - if I dont, its me who comes under investigation.
It is no different to depositing large sums of cash. 
On the other hand if I am buying and selling in bitcoin, swapping bitcoin into and out of various bitcoin wallets, I will eventually go hungry as it is practically impossible to buy food with bitcoin. 

There may be banks who are hostilr, or nervous about crypto and subsequently reluctant to enter into transactions, but so what? The onus will be on those who use crypto to convince them otherwise.


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## Leo

TheBigShort said:


> And as I have mentioned, cash deposits from exchanges are electronically recorded. So its source is easily traced.



Identifying the exchange doesn't cut it. The exchange is just that, it's not the source. 



TheBigShort said:


> or I traded goods and services for it. If im a trader, I will have inventory records of goods bought and sold - if I dont, its me who comes under investigation.
> It is no different to depositing large sums of cash.



Seriously? How to you provide enough evidence of the identity of the person?


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## TheBigShort

Leo said:


> Identifying the exchange doesn't cut it



Why not? Who said it doesn't cut it? 



Coinbase, state that they are legally compliant with all regulations in all jurisdictions in which it operates. Being legally compliant, licensed etc has its benefits. It means that if I transfer money from my coinbase account to UB account, UB is under no obligation to identify where coinbase sourced the money - it is a trusted, legal, regulated entity. That is the whole point of licensing etc. 



Leo said:


> Seriously? How to you provide enough evidence of the identity of the person?



Seriously? If I run a predominantly cash based business like a pub, and lodge €50,000 cash takings at the end of the week into the bank, do I need to know the identity of each individual that bought a drink with cash and where and how they sourced their income? 
Of course not. I show cash sales of €50,000 of stock that I sold as a trader involved in the pub trade.

Similarly, if I sold the stock accepting bitcoin, selling the bitcoin on an exchange and depositing it into a bank, why would I need show anything but a record a sales of stock through bitcoin?


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## Leo

TheBigShort said:


> Why not? Who said it doesn't cut it?
> 
> 
> 
> Coinbase, state that they are legally compliant with all regulations in all jurisdictions in which it operates. Being legally compliant, licensed etc has its benefits.



Again with the redirection, who said they weren't regulated? That has nothing whatsoever to do with the AML requirements if a financial institution. At this point I can only assume you are being deliberately obtuse. Read up on the requirements yourself, I have better things to do.



TheBigShort said:


> Seriously? If I run a predominantly cash based business like a pub, and lodge €50,000 cash takings at the end of the week into the bank, do I need to know the identity of each individual that bought a drink with cash and where and how they sourced their income?
> Of course not. I show cash sales of €50,000 of stock that I sold as a trader involved in the pub trade.



Again just more misdirection of no relevance to cryptos.



TheBigShort said:


> Similarly, if I sold the stock accepting bitcoin, selling the bitcoin on an exchange and depositing it into a bank, why would I need show anything but a record a sales of stock through bitcoin?



For the reasons I pointed out two pages ago, and again, in the circumstances pointed out two pages ago...


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## TheBigShort

Leo said:


> The challenge is with the audit trail to that point. Likely won't be a challenge for all, but for anyone who obtains bitcoin through trading activities, *proving the source is legit and not on any of the blacklisted organisations or nation states will be a challenge.*



No it wont. No more than cash transactions.


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## Leo

TheBigShort said:


> No it wont. No more than cash transactions.



As stated earlier also.


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## RedOnion

Expecting a bank to accept all transfers from any crypto trading platform is the money laundering equivalent of doing a funds transfer via Iran, and then saying you've an audit trail showing it originated somewhere else.

The AML requirements on banks are quite onerous, and the consequences of getting it wrong punitive, so it's easier to just outright reject them. Yes, trading platforms in some jurisdictions are regulated, but they do not have banking licences. The riskiest point in AML is the point at which funds enter the banking system.

There are lots of papers from G7, the FATC and IMF amongst others on crypto currency and money laundering / terrorist financing. The guidance is behind the reality, so again banks are just saying no, rather than risking falling foul of rules.


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## TheBigShort

RedOnion said:


> Expecting a bank to accept all transfers from any crypto trading platform is the money laundering equivalent of doing a funds transfer via Iran, and then saying you've an audit trail showing it originated somewhere else.



I dont think anyone is expecting banks to accept transfers from just any crypto platform.




RedOnion said:


> Yes, trading platforms in some jurisdictions are regulated, but they do not have banking licences.



True, but in many instances there is no legal requirement to hold a licence. If the trading platform is regulated to the point of complying with AML requirements, and otherwise satisfies all other regulatory requirements, including licensing or not, then there really should be no issue for a third party to accept the transfer of funds from that source.
Notwithstanding that, all financial institutions should have their own checks and balances to identify unusual activities, as would be required of them to satisfy AML requirements.



RedOnion said:


> There are lots of papers from G7, the FATC and IMF amongst others on crypto currency and money laundering / terrorist financing.



Of course, and of cash transactions, stock markets, property, art, casinos etc.


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## Leo

TheBigShort said:


> True, but in many instances there is no legal requirement to hold a licence. If the trading platform is regulated to the point of complying with AML requirements, and otherwise satisfies all other regulatory requirements, including licensing or not, then there really should be no issue for a third party to accept the transfer of funds from that source.



You're still conflating the role of the exchanges with that of the banking system. Just because one is compliant with the regs that apply to that business model does not mean there aren't issues for the other relating to the whole other set of regulations.


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## TheBigShort

Leo said:


> You're still conflating the role of the exchanges with that of the banking system. Just because one is compliant with the regs that apply to that business model does not mean there aren't issues for the other relating to the whole other set of regulations.



I'm not.

To save on time, perhaps you could outline in specific detail exactly what the issue is with depositing funds from the sale of bitcoin against depositing cash via the sale of say, piano lessons.


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## Leo

TheBigShort said:


> I'm not.
> 
> To save on time, perhaps you could outline in specific detail exactly what the issue is with depositing funds from the sale of bitcoin against depositing cash via the sale of say, piano lessons.



So we're back going in circles again. I don't think I'll get anywhere explaining the regulatory environments that apply to exchanges or financial institutions if you haven't grasped the fundamental differences yet, and how you bitcoin vs piano lessons doesn't apply.


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## TheBigShort

Its pretty simple really. In order to buy or sell bitcoin through an exchange, you need to have a bank account to move money. 
All my bitcoin was bought on an exchange using funds transferred from a bank account. 
All my sales of bitcoin were via an exchange that electronically recorded the transaction and which any authority or financial institution will have zero difficulty in tracing.

Im off to buy an apple now, in Spar, with cash - I hope this doesnt raise AML flags when Spar attempt to deposit the cash funds for the apple, along with all their other cash funds.


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## TheBigShort

Leo said:


> Yep, where the issues arise is in transferring money into or attempting to take it out of Bitcoin. Those transactions need to comply with whatever anti-money laundering legislation is in place in the local market, and that's causing some problems now. Also, US regulations cover the operation and management of crypto exchanges as evidenced in the Silk Road take down. So while money already in Bitcoin can move regulation free, putting it in, or getting it out is facing increasing hurdles.





Leo said:


> The challenge is with the audit trail to that point. Likely won't be a challenge for all, but for anyone who obtains bitcoin through trading activities, proving the source is legit and n



So, perhaps just to wind up on this, if you cant explain to authorities upon request where you sourced the income to buy bitcoin, or if you cannot show the sales transaction of bitcoin to explain new found wealth, that is going to be an issue? Is that correct?

Whereas if you can demonstrably identify all of your crypto transactions and associated payments, then your going be ok? Is that correct?


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## Leo

TheBigShort said:


> So, perhaps just to wind up on this, if you cant explain to authorities upon request where you sourced the income to buy bitcoin, or if you cannot show the sales transaction of bitcoin to explain new found wealth, that is going to be an issue? Is that correct?



Buying bitcoin, your money is most likely already within the banking system, so assuming the bank in question has done its due diligence on the money coming in in the first place, you've no problem. Taking it out, once you reach AML thresholds, the bank have to satisfy themselves as the the original source of the money. Ignoring speculation, showing transactions between yourself and an exchange doesn't give the bank the level of detail they need. 



TheBigShort said:


> Whereas if you can demonstrably identify all of your crypto transactions and associated payments, then your going be ok? Is that correct?



The challenge is tracing where the money originally came from, if you're selling items of high value and taking bitcoin as payment, fine, we know you got the money for selling your stock, but how do you prove the identity of the person you're dealing with?


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## Brendan Burgess

Hi Leo

This important issue might have been missed as it was buried in a long thread on a separate topic, so I have moved them all into this new thread.

There seems to be quite a few Bitcoin owners on askaboutmoney.

Would you have the time to do a post about what they should do to make sure that they can actually get the benefit of Bitcoin if they want to sell?

Is there anything they can do?

For example, if they suddenly lodge €1m in their AIB bank account, might AIB refuse?

If they part sell it and lodge €50k, would that be ok?

Do I need to worry if I make money on IG Index through short selling Bitcoin? 

I get daily statements from them, so it's easy for me to show the bank where the money came from. 



Brendan


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## TheBigShort

Leo said:


> The challenge is tracing where the money originally came from, if you're selling items of high value and taking bitcoin as payment, fine, we know you got the money for selling your stock, but how do you prove the identity of the person you're dealing with?



Why do I need to prove the identity if I have carried out a legitmate trade? Why is the identity of the customer who trades with me BTC needed, but not needed if trading in cash?


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## jman0war

A new report on Bitcoin Laundering undertaken by joint bitcoin analysis team FDD and Elliptic, have reported that laundering accounts for less than one percent of bitcoin transactions.

Story is here:  https://cointelegraph.com/news/bitcoin-laundering-less-than-one-percent-of-all-transactions
Source of report is here:  https://info.elliptic.co/whitepaper-fdd-bitcoin-laundering


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## TheBigShort

Brendan Burgess said:


> For example, if they suddenly lodge €1m in their AIB bank account, might AIB refuse?



This is a good example. My banking activities are usually restricted to the value of my wages.
So if I suddenly arrive with €1m cash, a €1m cheque or try to deposit €1m from a cryto exchange, flags are going to be raised - where did I source the €1m?

If I can explain, providing a record, paper or electronic, of the sale of an item, or items, for the sum of €1m, then I do not see what the problem is.

Eg: Perhaps I sold a house for €1m, or bought a winning lotto ticket, or sold BTC over the Coinbase exchange for €1m.
All of these transactions will be traceable.


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## TheBigShort

Hi

In order to deposit cash into Coinbase, it is sent to an Estonian bank account. From one EU bank account to another.
I rang Ulster Bank back in June when I completed my id and account registration.
I bought and sold a small amount of BTC in order to ensure I could get money in and out without fuss.
The transfer out was taking longer than expected so I rang UB to see if they had any issues with this other bank a/c.
The answer was along the lines, we do not refuse or block transfers from other EU banks without reasonable cause.
My money arrived a day later.


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## Leo

TheBigShort said:


> Eg: Perhaps I sold a house for €1m, or bought a winning lotto ticket, or sold BTC over the Coinbase exchange for €1m.
> All of these transactions will be traceable.



Well, most of them are traceable. The lottery win will be a bank transfer and there'll be no problem there as the bank will know exactly where the money came from to fund the lottery account. The money from Coinbase less clear, while the transfer request to the bank will come from Coinbase's bank, who and where did it come from before that? As Coinbase are an exchange, they're just a middleman in this, neither the source nor destination.


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## Brendan Burgess

Hi Leo

What are the limits which trigger a question or refusal from the bank? 

I posted a cheque for £5,000 sterling to my sterling account in Ulster Bank in Newry and was very surprised to get a phone call from them asking me where it came from? 

Presumably if someone lodges €1,000 profit from Bitcoin, no questions will be asked. 
But if they lodge €1m, it might be refused?  

Do they reject the transfer in or do they just ask questions? 

Brendan


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## TheBigShort

Leo said:


> The lottery win will be a bank transfer and there'll be no problem there as the bank will know exactly where the money came from to fund the lottery account



How will they know? If 50% of lotto tickets sales are by cash? How will they know if a significant proportion of this is not from money illegally obtained elsewhere?

The lottery is just a middleman here too.

This is the latest 'crackdown' story on RTE this morning

https://www.rte.ie/news/2018/0123/935254-skorea_crypto-currency/

Apparently "_Local crypto-currency traders will not be allowed to make deposits into their virtual coin exchange wallets unless the name on their bank account matches the account name in crypto-currency exchanges." _

If this is the definition of 'crackdown', then it cannot be taken seriously. This is a standard regulatory requirement in most developed countries.


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## RedOnion

Brendan Burgess said:


> What are the limits which trigger a question or refusal from the bank?


Note: while you've asked an interesting question, it's a criminal offence to assist anyone in circumventing AML / CTF regulations and controls, so it's unlikely that anyone who fully understands the practices in place with any bank, and the legislation, will actually answer it.


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## Leo

TheBigShort said:


> How will they know? If 50% of lotto tickets sales are by cash? How will they know if a significant proportion of this is not from money illegally obtained elsewhere?



Read what was posted last week on AML requirements... that will answer your question there, but do you honestly think anyone is laundering money via lottery tickets?


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## TheBigShort

Leo said:


> but do you honestly think anyone is laundering money via lottery tickets?



No probably not.

I do know that the Gilligan gang was purported to use bookmakers for laundering drug money, so aren’t on street bookmakers and racecourse bookmakers ideal middlemen for laundering drug money?

The ultimate point being, any cash heavy business is ideal for laundering money. Bitcoin transactions relative to gloval cash transactions are a drop in the ocean. Yet the scare-mongering is centred around bitcoin and not cash – see RTE report above.


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## Leo

RedOnion said:


> Note: while you've asked an interesting question, it's a criminal offence to assist anyone in circumventing AML / CTF regulations and controls, so it's unlikely that anyone who fully understands the practices in place with any bank, and the legislation, will actually answer it.



Good point. The Central Bank guidelines are published under this site, so it's certainly OK to point those out, but yeah beyond that it might get a little questionable.  The links to the right of that page include guidance to financial institutions on what they need to do be compliant with AML legislation along with EU & UN sanctions lists.


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## jman0war

TheBigShort said:


> No probably not.
> The ultimate point being, any cash heavy business is ideal for laundering money. Bitcoin transactions relative to gloval cash transactions are a drop in the ocean. Yet the scare-mongering is centred around bitcoin and not cash – see RTE report above.


Cash is much better for laundering proceeds of crime than bitcoin is.
Firstly, all bitcoin transactions are recorded on a public ledger; so if apprehended, additional instances of laundering are easy to reveal.
Secondly, it is a little cumbersome going from bitcoin to fiat.
It involves using regulated Exchanges that are compliant with KYC, or face-to-face localbitcoins.

The later may be preferable for a criminal gang as it is anon, however it would take more time to exchange money, and would have inconsistencies regarding price and availability, all subject to local demand.
There are security risks too, if a criminal gang is a regular seller on localbitcoins, a single police sting could expose the entire history of laundering.

Cash is still King.


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## jman0war

The fact that media run scare-mongering stories is to be expected.
Click-bait for one.
But in general terms the media are pure coward when it comes to any idea that challenges existing order.


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## TheBigShort

From Sept 2017

https://www.irishtimes.com/business...nd-how-come-there-s-so-many-of-them-1.3224402

Not one word of concern for money-laundering. 
Im not suggesting these cash buys are dodgy, but if the issue is identifying the source of the cash then these purchases would need to come under serious scrutiny. 

On the otherhand, if the cash payments are conducted through the regulated banking system, as is the crypto exchange transactions, and the banks are compliant with AML and KYC requirements (as is an exchange like Coinbase), then it is hard to see the issue is. 

Money laundering only becomes an issue if someone is actually laundering money, whether that is through  bookmakers, bank, art, property, crypto, casinos, etc...etc...and not because of crypto.


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## jman0war

Sounds like in Poland they are turning the screws on business bank accounts.
It's more to do with tax compliance and fraud according to the article.
This is a google translate of the webpage: 


> *Bank accounts of entrepreneurs under constant control. They can also be blocked*
> 
> Entrepreneurs' accounts are to be continuously inspected, thanks to which the system will automatically catch suspicious bills. It's mainly about tax fraud attempts. The control program is set to start soon - reports the "Puls Biznesu" daily.
> 
> As it appears from the Act on Counteracting Tax Extortion, suspicious accounts will be automatically blocked for 72 hours. During this time they will be checked. In case of doubt, blocking an account belonging to the entrepreneur may be extended up to 3 months.


https://www.money.pl/gospodarka/uni...kul/konta-bankowe-kas-banki,29,0,2396701.html

Would make one think twice about running a business in Poland, even a legitimate one.
If the bank can freeze you out for 72hrs up to 3 months based on whatever qualifies as a suspicious transaction?
Not many businesses have cash in the safe to survive a 3 month freeze on their money.
And no court order or oversight..


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## ant dee

jman0war said:


> If the bank can freeze you out for 72hrs up to 3 months based on whatever qualifies as a suspicious transaction?
> Not many businesses have cash in the safe to survive a 3 month freeze on their money.
> And no court order or oversight..


Why we need bitcoin, people ask...


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## Leo

TheBigShort said:


> Not one word of concern for money-laundering.
> Im not suggesting these cash buys are dodgy, but if the issue is identifying the source of the cash then these purchases would need to come under serious scrutiny.



You do know all those transactions had to satisfy the same AML requirements? And none of them involved anyone walking into an estate agent was a bag full of cash? There's no mention of a concern because there's full traceability.


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## TheBigShort

Leo said:


> There's no mention of a concern because there's full traceability.



So if I sell a house for €1m and I receive funds by AIB cheque, through a solicitor, and deposit that cheque into BoI, everything is ok.

But if I sell bitcoin for €1m and I receive funds from AIB electronically, via Coinbase EU bank a/c, and deposit those funds from Coinbase to my BoI account, everything is not ok?


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## jman0war

To echo what Andreas Antonopoulos says when he meets with government Regulators:
Nobody is questioning their right to Regulate bitcoin within their jurisdiction.
The question is how can they regulate bitcoin.

Bitcoin is not going to change it's rules to let _[insert country here]_ government have some sort of overarching power over it.


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## jman0war

Wouldn't just removing cash from the system be the most definitive response to money laundering?
The amount of bitcoin used for money laundering is tiny, less than 1 percent of bitcoin transactions according to a recent report.

There's much more illegal activity involving cash and it has always been that way.
To really take-on money laundering, surely it would be more effective to withdraw notes from circulation and force all transactions to run through banks.
THEN we'd be safe, right?


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## Leo

TheBigShort said:


> But if I sell bitcoin for €1m and I receive funds from AIB electronically, via Coinbase EU bank a/c, and deposit those funds from Coinbase to my BoI account, everything is not ok?



All explained last week, and a number of times since.


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## TheBigShort

Not very well it has to said. In fact, the hyperbolic, scare-mongering "crackdown" stories were better explained to you.


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## Leo

TheBigShort said:


> Not very well it has to said. In fact, the hyperbolic, scare-mongering "crackdown" stories were better explained to you.



Maybe on the first count, looks like it'll take someone with more patience of aptitude in education to get across the meaning of source. But I didn't need any explanation on the 'crackdown' stories, I understand the technology and regulatory frameworks, so it's all pretty straightforward. For example, I didn't read the RTE report linked above as any form of crackdown on Bitcoin as others seem to have, it's simply a crackdown on anonymous banks accounts, and that just brings more of their regulatory framework into line with the rest of the world. RTE being RTE, throw in the tenuous link to Bitcoin as click-bait.


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## TheBigShort

Leo said:


> the meaning of source.



Well the original source for all cash is the central banks, so from the get-go the source of all money is dubious 

On the otherhand, considering the RTE report earlier which is clearly about crypto-currency exchanges (I counted the phrase 'crypto currency' seven times before stopping) and not about 'anonymous bank accounts'I think you had better read the report, to understand what it is saying, before being so dismissive.


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