The Finance committee of Canada’s lower house wants the cryptocurrency trade to be in compliance with anti-money laundering (AML) and anti-terrorist financing (ATF) regulations.
In its report reviewing the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, the committee, headed by Malpeque MP Wayne Easter, said that cryptocurrency exchanges should be considered money service businesses (MSBs) for activities involving the exchange of cryptocurrencies to fiat.
With exchanges considered as MSBs, “any persons or entities dealing in virtual currencies will need to implement a full AML/ATF compliance program and register with FINTRAC [Financial Transactions and Reports Analysis Centre of Canada],” the committee report read.
The desired regulations, according to the committee, would provide authorities with the identity of users of cryptocurrency wallets, upon demand. This will “[e]nsure that bitcoin purchases of real estate and cash cards are properly tracked and subjected to AML regulation,” the report read, adding that “[l]aw enforcement bodies must be able to properly identify and track illegal crypto-wallet hacking and failures to report capital gains.”
The committee noted, based on witness testimony, that “lawyers and real estate agents do not check their clients against sanctions list, and that no list of ML/TF bad actors is readily accessible in Canada apart from that provided by Global Affairs Canada, which is of limited use to the AML regime.” On the other hand, the UK government was said to provide a list for which reporting entities were required to screen clients.
It was also stated that “some witnesses” claimed an estimated 80% of cryptocurrency’s value “could be linked to the proceeds of illegal activities.” This is significantly higher than the findings of blockchain forensics firm CipherTrace, whose report showed that in 2018, as of September 29, 4.7% of total BTC received in countries with weak regulations were from illegal operations.
The Finance committee said that “while the risk of cryptocurrencies being used to launder money is low, it is a very high risk for being used as a payment method for criminal activity.”
The UK’s Treasury committee, in a report released last September, cited the same concerns of cryptocurrencies being used by criminals, while also warning of the volatility in cryptocurrency markets that puts investors’ savings at risk.
Canada has been a favored location for cryptocurrency miners, due to its relatively low-cost energy sources. DMG Blockchain Solutions’ 85-megawatt mining facility just began operations this month in its 34-acre property in British Columbia.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Taiwanese legislators have amended the country’s financial laws in order for cryptocurrency transactions to be covered by the same anti-money laundering (AML) restrictions as fiat currencies.
News outlet Focus Taiwan said the changes to the country’s AML and terrorism financing prevention laws will now be applicable to cryptocurrencies. State regulator the Financial Supervisory Commission (FSC) will have authority to make cryptocurrency exchanges and other trading platforms require users to provide their real names. If cryptocurrency-related companies are unable to obtain such information in servicing their clients, banks could refuse to deal with them, and even report them in the event that such transactions appear suspicious.
News.Bitcoin.com noted that noncompliance with the new measure by nonfinancial firms will result in a fine of from CNY50,000 ($7,300) to not more than CNY1 million ($145,000). Noncompliant financial institutions, on the other hand, will be meted a penalty of from CNY500,000 ($73,000) to not more than CNY10 million ($1.45 million).
The Ministry of Justice was reported by Focus Taiwan as saying that previous amendments in 2016 had been insufficient in preventing financial crimes, thus requiring the recent legislation, which is expected to raise the country’s standing when it is evaluated by intergovernmental organization the Asia/Pacific Group on Money Laundering (APG) this month.
The ministry also said Taiwan would now be more in conformity with international standards versus money laundering.
A representative from cryptocurrency exchange BitoEX was cited by News.Bitcoin.com as saying the company’s requirement to provide real names had only been applicable to transactions involving fiat. Cryptocurrency-to-cryptocurrency transactions, however, have been possible without providing one’s real name.
FSC Chairman Wellington Koo has said that his agency was in the process of drafting guidelines for initial coin offerings (ICOs), with the aim of simplifying the offering process, and to enhance the liquidity of tokens. The FSC reportedly intends to implement the new ICO regulations by June 2019.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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By June 2019, the Financial Action Task Force (FATF) will start requiring jurisdictions around the world to regulate cryptocurrency-related companies—from exchanges to wallet services and even initial coin offerings (ICOs)—all in a bid to stem the use of virtual currencies for criminal activities like money laundering and terrorism financing.
The Paris-based intergovernmental organization announced last week that it has amended its global Standards “to address the regulation of virtual assets,” noting that there is an “urgent need for an effective, global, risk-based response to the AML/CFT [anti-money laundering/combating the financing of terrorism] risks associated with virtual asset financial activities.”
FATF amends its global Standards to address the regulation of virtual assets and prevent their misuse for #moneylaundering and #terroristfinancing
https://t.co/R5R7j484Td pic.twitter.com/mOqeY25aJd
— FATF (@FATFNews) October 19, 2018
Under the changes to FATF global standards, crypto exchanges, certain types of wallet providers and providers of financial services for ICOs will be subjected to AML/CFT regulations, such as conducting customer due diligence including ongoing monitoring, record-keeping, and reporting of suspicious transactions.
“By June, we will issue additional instructions on the standards and how we expect them to be enforced,” Marshall Billingslea, president of FATF, told Reuters.
The FATF will conduct periodic reviews after the regulations are enforced, and countries that fall short risk being blacklisted by the organization.
“Some jurisdictions already regulate virtual asset activity in accordance with the 2015 guidance,” FATF said, noting that the updates to FATF’s Standards are “largely compatible with their existing regulatory requirements.”
Watchdogs like FATF, which claimed to have been monitoring the so-called risks in the crypto space for several years already, may have missed the reports showing most crime are still happening in the fiat world. Just recently, a report by undercover journalists in 12 countries revealed that banks across Europe helped their clients illegally take $63 billion in taxes. Involved in the scheme, according to the report, are Barclays, JPMorgan, BMP Paribas, UBS, Morgan Stanley, Banco Santander, Meryl Lynch, Deutsche Bank and SEB bank out Sweden.
So why is crypto still the bad guy?
Actually i take that back, Governments are the number one offenders of terror financing. Public immutable ledgers catch criminals. Period
— Stellar.org Global Cryptocurrency (@xlm_usd) October 21, 2018
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Binance, the largest cryptocurrency exchange by trading volume, has procured the services of cryptocurrency compliance solutions firm Chainalysis, to better ensure meeting anti-money laundering (AML) and know-your-customer (KYC) requirements.
The announcement on the Chainalysis blog comes at around the time members of the Group of 20 (G20) had committed to apply AML regulatory standards for cryptocurrencies.
Chainalysis Chief Operating Officer Jonathan Levin said, “Cryptocurrency businesses of all sizes face the same core challenge: earning the trust of regulators, financial institutions and users. We expect many to follow Binance’s lead to build world-class AML compliance programs to satisfy regulators globally and build trust with major financial institutions.”
Binance Chief Financial Officer Wei Zhou said, “Our vision is to provide the infrastructure for a blockchain ecosystem and increase the freedom of money globally, while adhering to regulatory mandates in the countries we serve.”
Chainalysis claims that its software, Chainalysis KYT (Know your transaction), is the only real-time transaction monitoring solution for cryptocurrencies, which works by “pattern recognition, proprietary algorithms and millions of open source references to identify and categorize thousands of cryptocurrency services to raise live alerts on transactions involved in suspicious activity.” The company, founded in 2014, has over 150 clients worldwide, including global law enforcement agencies and regulators.
Countries have provided regulatory frameworks that integrate AML compliance for the cryptocurrency trade. As of October 15 in Norway, new regulations cover “platforms that facilitate trading and exchanges by connecting buyers and sellers,” which exempts the trade of cryptocurrencies with other cryptocurrencies.
Australia has had its AML compliance legislation since April, which among other things requires exchanges to report transactions involving physical currency of AUD10,000 or more.
Last week, Binance delisted four altcoins, saying certain factors were considered, including “evidence of unethical/fraudulent conduct,” and “responsiveness to our periodic due diligence,” as well as quality of development, and communication with the public.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Effective Oct. 15, cryptocurrency-related companies in Norway—including branches of multinational companies—will have to adhere to a new set of anti-money laundering regulations (AML) set by the Financial Supervisory Authority of Norway, also known as the Finanstilsynet.
The new regulations apply to cryptocurrency storage services and providers offering exchange services between cryptocurrencies and fiats, as well as “platforms that facilitate trading and exchanges by connecting buyers and sellers.” Crypto-to-crypto exchange platforms, however, are exempt from the new Money Laundering Act.
Companies storing private keys on behalf of clients are considered to be involved in the transfer, storage or purchase of virtual currency. Therefore, all companies conducting such operations will have to follow these new laws. This, however, will not apply to companies offering private cryptographic key storage.
Companies in the crypto sector will have until January 15, 2019, to comply with the new Money Laundering Act, which stated: “The Ministry may in regulations lay down rules making this Act applicable to undertakings engaged in the mediation of financing by way of donation, and to exchange service platforms and custodian wallet providers of virtual currency.”
In explaining to what extent the new laws will apply, the authority stated that FSA has the duty to monitor money-laundering activities done by virtual currencies and storage providers. These new rules were created to stop potential illegal activities from taking place.
“Service providers are subject to the regulatory framework by virtue of the services they offer, regardless of how the service is organized. This also covers service providers that currently operate without being registered in the enterprise register, which operate over private accounts,” according to Finanstilsynet.
In addition, Finanstilsynet explained that crypto companies in Norway will be required to register with the authority and provide the necessary documents to show their operations. Finanstilsynet will also require customers to prove their identity and answer questions on the purpose of their transaction, the origin of their funds and so forth.
These rules also impose reporting requirements on crypto services providers in the country. However, this will not affect people who buy or sell their own cryptocurrencies for private purposes. It will also not affect these who occasionally assist friends and acquaintances with the purchase and sale of virtual currencies.
Companies who fail to comply with these new rules will have face penalties from the authority.
“Finanstilsynet will ensure that virtual currency exchange and retention providers comply with the money laundering rules. However, FSA does not have any tasks related to the monitoring of other parts of these providers, such as investor protection or advice requirements,” according to the government agency.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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Concerned about the growing number of cryptocurrency-related crimes, Thailand’s Anti-Money Laundering Office (AMLO) is looking to expand its powers to allow for seizure of digital assets, including cryptocurrency wallets.
“We have discussed launching our own ‘AMLO Wallet’ to hold or confiscate digital currency from illegal sources,” AMLO Secretary Witthaya Neetitham said during a recent seminar in Bangkok, according to a report from news outlet The Nation.
The desired legislation would also come in handy for the confiscation of cryptocurrency earnings from other crimes. The Nation article cited a case where Thai police had arrested the operator of a child pornography website whose digital wallet contained THB123 million ($3.8 million). “We found bitcoin in his e-wallet, but had to leave it there because we don’t have any regulations [for such seizures],” Police Captain Ekkanit Nathethong said.
Witthaya said that AMLO did have authority over companies licensed by the country’s Securities and Exchange Commission, but when it came to unlicensed entities, “We cannot identify the cryptocurrency operator or receivers when duped victims transfer money to the criminals.”
Chartpong Chirabandhu, of the Office of the Attorney General, shared that prosecutors were limited in their ability to use electronic evidence in building a case against cybercriminals.
Recently, a Finnish businessman was defrauded of $24.4 million worth of cryptocurrencies by Thai suspects, who have since admitted to the crime and are participating in negotiations for the return of the stolen amount. The suspects had invested the funds of Aarni Otavi Saarimaa in three companies, before running off with the money.
Colonel Pisal Erb-Arb, deputy commander of the Narcotics Suppression Bureau, proposed a working panel tasked to fight cybercrime. “We need to hurry. Thailand is a haven for money laundering that finances terrorism,” said Pisal, who helped with the arrest of Alexander Cazes, founder of dark web marketplace AlphaBay, where users transacted in cryptocurrencies.
The Thai government has made several policy changes with its growing awareness of cryptocurrencies. Last month, the Bank of Thailand, the country’s central bank, reversed its earlier ban on banks engaging in cryptocurrency-related activities. Now, banks are permitted to create subsidiaries for the purpose of cryptocurrency transactions, issuance of tokens, and the like.
The SEC began its regulation of cryptocurrency-related activities last May, and has approved five exchanges and two dealers since.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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