How blockchain could end, instead of enable, money laundering
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The issue of access to banking services is also key to the growth of a local digital currency industry. Blanket classification of all bitcoin businesses and users as 'high risk' customers is both inappropriate and disproportionate.
Banking institutions should have a risk-based approach that is 'tailored to the nature, size and complexity of their business and proportionate to the level of money laundering and terrorism financing risk'. It proposed legislation to make it an offence for banks to discriminate against a customer on the basis that they are trading or transacting in Bitcoin.
By definition new and emerging fintech startups including mHITs represent a potential threat to the status quo. In our 10 years of operation, we have observed the terrorist financing bitcoin wallet of Australian banks to embrace innovation outside the comfort of core business products of lending, cards and insurance.
ASIC advised that it 'does not have any power to intervene in decisions made by terrorist financing bitcoin wallet in relation to digital currencies, and considers that this is a matter for the banks and businesses involved'.
Mr Bezzi noted that the ACCC's view is that 'it is up to banks to determine who they want terrorist financing bitcoin wallet have as their customers'. He noted further that the ACCC had no evidence of collusion between banks on the issue of providing banking services to digital currency businesses. We are dependent on our banking relationships. We have worked closely with them to achieve a level of comfort for them because we require the ability to bank in the Australian banking sector.
We have mirrored their safe harbour practices. We will require you to provide photo ID. We will require you to provide proof of current residential address and date of birth. In his view, this approach assists banks comply with their obligations. Terrorist financing bitcoin wallet suggested that perhaps the 'sorts of businesses that have been unable to get access to banking accounts are those that have been unable to demonstrate that they are doing that level of due diligence'.
He remarked that in the 'early days' the only thing that a customer may have been required to provide in order to purchase Bitcoin was a Bitcoin wallet address and an email address, which did not necessarily identify the customer.
In that scenario, it is fair to say terrorist financing bitcoin wallet there is not a whole lot of know-your-customer going on. A business operating like that terrorist financing bitcoin wallet present a real challenge for a bank to provide banking services to because they cannot get satisfied that the underlying business is understood.
I think there has been a lot of work from a number of businesses to try and move well beyond that and do the appropriate level of due diligence, which is something we would certainly support. From the point of view of a bank that is providing banking services, if we cannot satisfy ourselves that we can do all the things that we have to do under the legislation to understand terrorist financing bitcoin wallet nature of the transactions and what is going on there, it puts terrorist financing bitcoin wallet in a very difficult position to be able to provide those banking services.
The issues are particularly intense when it comes to moving payments internationally, because obviously we have counterpart banks to terrorist financing bitcoin wallet with globally and they have got their own anti-money-laundering, counter-terrorism-finance obligations, and they will expect us to understand the nature of the payments as well.
PayPal noted that it was proceeding gradually in its approach to digital currencies, so it could ensure that while embracing innovation it remained committed to making payments safer and more reliable for customers. PayPal noted that while all users of PayPal were linked to a specific named PayPal account, with consumer protection for buyers, these standards were not currently required for payments using Bitcoin.
As digital currency does not currently come under this regime they are not required to meet these standards and operational requirements. I would see a very close analogy between terrorist financing bitcoin wallet business a foreign exchange broker is carrying on, and a company that is in the business of buying and selling Bitcoin for cash.
It is just that under the definitions of the current AML framework foreign currency broking is included as a designated service but Bitcoin broking is not. The 'know your customer' KYC and customer due diligence processes increase the ability of businesses to better identify and mitigate money terrorist financing bitcoin wallet and terrorism financing risks in the conduct of their transactions. There was an example given about a bitcoin broker who might have had a bank account with the Commonwealth Bank.
If a cash payment came in then the bank would know, presumably, with the purchase of bitcoin. That is about all we would know. That is why there are a lot of advantages in the know-your-customer and due-diligence obligations also sitting with the broker, because the broker who has facilitated that purchase for the customer would also know, for example the wallet address that the customer used.
Where they received that bitcoin that is not something the bank would know. If that did terrorist financing bitcoin wallet to be associated with suspicious activity, that would then be something that could be terrorist financing bitcoin wallet under requests from law-enforcement authorities. I think the phrase that has been used in some terrorist financing bitcoin wallet the previous inquiries is on-ramps and off-ramps.
It is very much that. If you are relying on trying to get visibility of the on-ramps and off-ramps only, through the bank part of the transaction, you do not really see that linkage to the bitcoin wallet. I know Bit Trade and others like them are endeavouring to put that same sort of know-your-customer monitoring within their activities as well.
That makes a lot of sense. It is a secure, real-time on-line, electronic document verification system. Identity documents that can be verified using the DVS include: However, without access to the DVS, 'the information is patchy' and when information cannot be verified electronically his business has to verify it manually.
First and foremost, digital currency and cryptocurrencies have evolved in a way that is not currently covered by Australia's anti-money-laundering regime. That is an issue for us in that, at the time the act was drafted, we did not really think about these types of currencies.
He explained that this creates a particular challenge when working out how to regulate digital currencies:. While we might have some visibility of the on-ramps and off-ramps in the places where they intersect directly with the financial sector, short of having everybody who has a bitcoin and makes a transaction report to AUSTRAC, it is going to be very difficult to find a point where all those transactions are co-located in a way they can be reported.
So that is a big challenge for us, because we are going to lose visibility of how these bitcoins move around once they are inside the bitcoin system. We can see people buying them, we can see people selling them to a large extent, but we lose visibility of what happens within the system.
Regulators need to find a balance between trying to mitigate risks while allowing the more positive uses of digital currency to develop. In many instances terrorist financing bitcoin wallet are unable to do that because they cannot show adequate identification. It is worse than that in a sense, because even people with identification today are having terrorist financing bitcoin wallet transferring money across corridors that are considered risky. And that is the danger: You do not know how much it is.
You do not know who it is being transferred from and to. So, if money is pushed out of the formal system—I am not suggesting that it is excessive regulation—you will not see it. You cannot see it; you do not know where it is going. And that is the real concern. It also noted potential benefits for financial inclusion. It noted that the FATF is an intergovernmental body that develops and promotes policies to protect the global financial system against money laundering and terrorism financing.
The sort of obligations in our act then are for them to have an anti-money laundering and counter-terrorism financing program, which means that they need terrorist financing bitcoin wallet assess the risks of money laundering for their customers and the types of transactions that they are dealing with. They have to have a program in place to mitigate those risks.
They have to carry out know your customer procedures with their customers. They have to have ongoing due diligence programs around watching whether their customers risk is going up and down and whether they need to do more than they have done before. You might have a report about that and you might have a report where they were transmitting internationally, as we talked about.
If they are going to transact in the same way as what we would call remittance providers transact, then there would seem to be at the moment—off the top of my head—no policy reason why you would not cover them in the same way. We would certainly want suspicious matter reporting. In Australia the vast majority of Digital Currency businesses and users are law-abiding and desire the enhanced legitimacy of appropriate legal oversight and recognition.
Incorporating Digital Currency into law enforcement legislation, particularly through the Anti-Money Laundering and Counter-Terrorism Financing Actis a necessary step toward guaranteeing the security and legitimacy of Digital Currencies in Australia.
It argued international cooperation was essential to developing a consistent international approach to regulation to avoid the risk of regulatory arbitrage, where businesses take advantage of more favourable regulations in other jurisdictions. Furthermore, they currently stand outside this robust regulatory regime designed to detect and deter money laundering and terrorism financing. Previous Page Contents Next Page.
Chapter 6 Chapter 6 Anti-money laundering and counter-terrorism financing regime 6. The relationship between digital currency businesses and banking services 6. He explained that this creates a particular challenge when working out how to regulate digital currencies: Senator Sam Dastyari Chair Navigation:
