Čvn 05

‘Big Four’ Australian Bank Beats Bitcoin… in Money Laundering

· June 4, 2018 · 9:00 pm

One of Australia’s “big four” banks, Commonwealth Bank (CBA), has agreed to pay Australian Transaction Reports and Analysis Centre (AUSTRAC) AUS$700M ($530M USD) in settlements for breaching anti-money laundering and counter-terrorism financing laws.

During a period of 3 years, CBA had failed to report 53,506 bank transactions, improperly monitored 778,370 accounts for money laundering red flags, and filed 149 suspicious matter reports late. The scandal resulted in the departure of Chief Executive Ian Narev.

CBA denies knowingly breaching AML laws, arguing that a single coding error had led to the failure to report the 53,506 transactions. However, they did admit responsibility for a lack of proper due diligence.

“Our agreement today is a clear acknowledgment of our failures and is an important step towards moving the bank forward. On behalf of Commonwealth Bank, I apologise to the community for letting them down,” said CBA current chief executive, Matt Comyn.

Illegal transactions: Fiat vs. Crypto

This news is particularly ironic considering the accusations by the mainstream media (and Bill Gates) that Bitcoin and other cryptocurrencies are being used primarily for money laundering and funding terrorism.

Studies conducted by Colombia University Economics professor Edgar Feige have already disproven these claims, citing that almost 50% of the world’s hard currency is utilized to make Illicit transactions like drug and arms trafficking.

A recent panel held by the US Senate Judiciary on modernizing anti-money laundering laws also found that only a small percentage of illicit activity spending is done through cryptocurrency.

The fact remains that cash is offline, and therefore more difficult to trace. Digital cash is recorded on a centralized database, where institutions with their own agendas can easily hide these transactions from the authorities.

By contrast, the immutability of transactions on the Bitcoin blockchain actually makes it harder to move money around without a trace.

A recent study by Qatar University and Hamad Bin Khalifa University revealed that unmasking the users behind these transactions often requires nothing more than a wallet address and a Google search. Qatar University researcher, Husam Al Jawaheri, explained:

The retroactive operation security of Bitcoin is low. When things are recorded in the blockchain, you can go back in history and reveal this information, to break the anonymity of users.

The best drug traffickers can hope for at the moment is using coins like Monero to mask their transactions, however, even Monero has its vulnerabilities.

CBA Implementing Blockchain?

Just 2 years ago, the now-ousted CBA executive Ian Narev acknowledged blockchain’s potential to be “transformational” for customers and in reducing costs, while perhaps not also recognizing its capabilities as an immutable ledger for the Bank itself.

It’s safe to say that a CBA ledger built on the blockchain would’ve made it much more difficult to conceal 53,506 transactions, saving AUSTRAC a lot of time and money investigating the breach.

To date, CBA has spent more than $400 million on anti-money laundering compliance measures.

Do you think the bank would consider using Blockchain technology to improve compliance with AML and counter-terrorism financing laws? Share your thoughts in the comments section below!

Images courtesy of Shutterstock

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Dub 22

Florida Bill Aims To Add Virtual Currency To AML Statutes

· April 22, 2017 · 1:00 pm

An act designed to add virtual currencies to Florida’s anti-money laundering statutes has unanimously passed three state committees.

Bill Targets ‘Ill-Gotten Gains’ From ‘Internet-Based Currencies’

The bill, sponsored by republican Jose Felix Diaz, “makes sure that traffickers and fraudsters can no longer try to use internet-based currencies to hide and move their ill-gotten gains,” State Attorney Katherine Fernandez Rundle said in a statement quoted by local news resource Miami Herald.

Rundle added:

The high-tech criminals of the 21st Century use virtual currencies like bitcoin to accumulate and hide the profits of their illegal activities.

Bitcoin related crime

As the Herald notes, the legislation comes hot on the heels of the failed prosecution of Florida resident Michell Espinoza, who allegedly tried to sell $1,500 of bitcoins which were used to purchase stolen credit card information.

Despite his arrest after undercover law officers posed as traders on Localbitcoins, telling Espinoza they intended to use the funds for illicit purposes, a judge ultimately threw out his case as Bitcoin is not considered money under current Florida law.

“This court is unwilling to punish a man for selling his property to another when his actions fall under a statute that is so vaguely written that even legal professionals have difficulty finding a singular meaning,” the ruling determined in July last year.

No Official Identity For Bitcoin In Florida

Fellow Republican Dorothy Hukill meanwhile announced in September that she was seeking official recognition of Bitcoin as a currency in the state, but no progress has yet been made.

The latest motion has ruffled feathers among local cryptocurrency advocates. Barry University economist Charles Evans explained to the Herald how it could send the wrong message.

Barry University economist Charles Evans

Florida legislators will be sending a very clear signal that financial innovation is not welcome here… No doubt, officials in China, Europe, Russia, Texas, and other places where Bitcoin is welcome will be pleased.

Others were less concerned, local lawyer Andrew Hinkes claiming authorities would still need to prove intent to use Bitcoin for illegal activities to entail a prosecution.

I don’t think it would affect the day-to-day users of bitcoin, or investors who hold bitcoin… but it might affect the business of those who exchange bitcoin for dollars. Now, assuming the facts support the intent required by law, the path to prosecution of traders for money laundering is clearer in Florida.

The bill is now awaiting its audition before a further state committee.

Virtual currency has faced a continued patchwork legal status across US states, with jurisdictions taking markedly different approaches to regulating it.

What do you think about Florida’s latest bill and Bitcoin’s status in the state? Let us know in the comments below!

Images courtesy of Shutterstock, Barry University

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Úno 17

Tokken Puts the Legal Marijuana Industry on the Immutable Bitcoin Blockchain

Source: bitcoin

Tokken Puts the Legal Marijuana Industry on the Immutable Bitcoin Blockchain

Tokken (pronounced Token, or Tokin’) is a new Bitcoin company that is targeting the marijuana industry’s inability to get bank accounts. Tokken was founded by Lamine Zarrad, a veteran of the financial regulation industry. Namely, Zarrad has worked for the Office of the Comptroller of the Currency (OCC), which regulates and supervises the country’s thousands of banks and savings associations. With the recent promises that the Department of Justice will finally leave legal marijuana companies to the regulations of their respective states, the door for bank collaboration with medicinal and recreational marijuana dispensaries has cracked open a bit – letting out pungent smoke that has again scared the other side. Banks aren’t going to embrace marijuana companies just because the DOJ is nominally backing off, their chief concern is still anti money laundering. Zarrad hopes that his experience at the OCC will be crucial in allaying the fears of banks and their regulators.

Also read: Marijuana Industry Could Still Use Bitcoin

Securing the Cannabis Industry’s Future with the Bitcoin Blockchain

Tokken is one of the first companies to enter this space that has publicly committed to using the Bitcoin blockchain. Not too surprising given that Zarrad’s founding partner at Tokken, Tom Rau, has even been referred to as “The Durham Prince of Bitcoin.” Other companies have approached the problem from different angles. Hypur is a company based in Arizona that has raised $5 million USD with a mobile app that geographically tags transactions so that banks and regulators can verify that the purchase was indeed made within the physical premise of the dispensary. However, since Hypur doesn’t use the Bitcoin blockchain, the transaction data stored will not be as much of an uncensored truth as Tokken will be able to provide. Tokken’s business model will be to use a combination of ACH and the Bitcoin blockchain for record keeping. While it is unclear whether Bitcoin can be used to fund or call on consumer or business accounts, Zarrad has made it clear that every Tokken transaction hash(ish) will be recorded on the Bitcoin blockchain. Both the dispensaries and the banks will have their record that proves a dispensary is staying within its legal bounds – the wonders of triple entry accounting.

Denver, Colorado to Serve as Tokken Testing Ground

Denver, Colorado’s Ballpark Holistic Dispensary has committed to using Tokken’s system once it is available. The dispensary’s owner, Stephanie Hopper, is one of the lucky Coloradans with a bank account for her dispensary. Currently, these are only given by the smallest of banks and credit unions. By leveraging the immutability of the Bitcoin blockchain, Tokken will make marijuana transactions so clean and auditable that even the largest banks won’t have an AML excuse to ban cannabis companies. The Bitcoin blockchain should be considered as the ultimate tool for provenance – the blockchain is the answer to regulators demanding seed-to-sale accountability. While Tokken focuses on the sale aspect, other companies are starting to emerge on the other end of the spectrum as well. As more companies sprout up to bridge the high friction financial no man’s land that surrounds marijuana companies, so too does awareness that a closed loop system without banks is now possible thanks to Bitcoin.

Featured image from Juwan Li Photography.

The post Tokken Puts the Legal Marijuana Industry on the Immutable Bitcoin Blockchain appeared first on Bitcoinist.net.

Tokken Puts the Legal Marijuana Industry on the Immutable Bitcoin Blockchain

Úno 16

BTCDirect: Making Purchashing Bitcoin Easier

Source: bitcoin


The world of Bitcoin and digital currencies allows for the creation of many different business models, some of which improve upon existing financial solutions. Buying or selling Bitcoin through an exchange is often a hassle, but there are services which make the process a lot of more streamlined. BTCDirect has a unique approach to the Bitcoin exchange concept, as they are more of a brokerage than a regular exchange.

Also read: Bitcoinist Weekly News Re-Hash: Valve Accepting Bitcoin, Antonin Scalia Dead

Different Approach Leads To More Convenience

One of the main hurdles to overcome for digital currency adoption is the mental barrier people are faced with when showing an interest in Bitcoin. Obtaining their first share of the popular digital currency can be a struggle as there are very few convenient methods to purchase Bitcoin within minutes. In most cases, consumers are left with bank transfers, which can take several days to complete.

BTCDirect is a European exchange attempting to remove this entry barrier from the equation. Rather than positioning themselves as “another” Bitcoin exchange, BTCDirect will act as a broker and execute orders on behalf of its customers. All transactions are completed through a variety of international Bitcoin exchanges, guaranteeing there will always be enough liquidity to accommodate for user requests.

Furthermore, the European Bitcoin broker is accepting a variety of convenient payment methods that allow for purchases to be completed within two minutes of starting the process. Among these accepted payment methods are options such as Bancontact/Mr. Cash, iDeal, credit cards, and Sofortbanking. All of these payment methods are subject to confirmation in a matter of seconds, making for a smooth transaction on both sides.

Buying Bitcoin through BTCDirect does require verification. When customers want to raise the limit, they will be going through a verification process that is rather unique in the world of Bitcoin. Instead of asking users to send a scanned copy of their user ID and a proof of address, BTCDirect will verify one’s identity through a Skype video call. By showing your id/passport, the support agent will activate and upgrade your account on the spot. This model allows users to register and purchase bitcoin with their payment method of choice within 10 minutes

As BTCDirect CEO Mike Hutting mentioned in an interview earlier, the company has to comply with European KYC and AML regulations. Using accessible and convenient verification procedures through Skype or live chat makes it easier for novice users to get up and running in a matter of mere minutes.

Unlike what most people assume, Bitcoin is not associated with any form of anonymity. BTCDirect is a firm believer of how online purchases should not be anonymous, as there is no way for companies to be compliant and offer anonymity at the same time. Most BTCDirect users acknowledge that fact, though.

BTCDirect Looks At Insured Offline Bitcoin Storage

It is important to note BTCDirect aims to be more than just a broker for buying and selling Bitcoin throughout Europe. The company is planning to explore opportunities in the world of insured offline cold storage. Offering such a feature would keep consumer funds safe from cyberattacks, which will, in turn, help put people’s minds at ease.

The concept of Bitcoin cold storage is nothing new under the sun, as various [mobile] wallet solutions offer a similar feature. However, when it comes to novice users, they will need to be sure their funds is kept safe from all types of harm. Bitcoin is a learning curve, and not everyone will set up a Bitcoin wallet on their computer or mobile device. Having a cold storage solution at the disposal of the user while they learn more about how to set up their own wallets is a great move by BTCDirect.

What do you think of BTCDirect? Let us know in the comments below!

Source: News Tip Via Email

Images courtesy of BTCDirect, Shutterstock

The post BTCDirect: Making Purchashing Bitcoin Easier appeared first on Bitcoinist.net.

BTCDirect: Making Purchashing Bitcoin Easier

Led 26

Belgian Government Aims To Prevent Bitcoin Money Laundering

Source: bitcoin

Bitcoinist_Belgian Government

According to a recent article in Belgian newspaper De Morgen, the government is setting plans in motion to target money laundering actions in Bitcoin. Similarly to any type of payment in the world, Bitcoin has become a tool wielded by internet criminals. However, the popular digital currency does not provide privacy or anonymity, and tracking down individuals using Bitcoin for money laundering purposes is a lot easier compared to when cash is involved.

Also read: UniChange Launches Bitcoin Debit Cards!

Money Laundering And Bitcoin Is Not Such A Big Issue

There is still a lot of confusion as far as Bitcoin and digital currencies are concerned. Far too many people still believe Bitcoin offers anonymity and privacy, even though nothing could be further from the truth. However, it only makes sense government officials want to prevent money laundering from happening, and they will be taking a closer look at the concept of Bitcoin altogether.

First of all, Bitcoin is a far cry from anonymous, as every transaction can be tracked on a public ledger in real time. As part of this technology, both the sender and recipient will be visible for the entire world to see, although no personal information about the users is shown at any point. Identifying people by their wallet address is quite a challenge, but sooner or later, the funds will end up at a Bitcoin exchange.

This is where the illusion of anonymity or privacy ends completely. Anyone who wants to use a Bitcoin exchange will have to go through a verification procedure and submit a copy of government-issued ID. All of this information is verified independently, and allows for Bitcoin addresses to be linked to individual users. This makes the entire concept of money laundering with Bitcoin impossible. 

Cash money, on the other hand, does not disclose personal information either. Once a cash bill or coin leaves the bank ecosystem and ventures into the world, there is no way of tracing the recipient or origin of the funds by any means. This makes cash the most anonymous way of transferring value around the world, and it is favored by [online] criminals above anything else, especially for money laundering purposes..

That being said, governments around the world are worried about Bitcoin being used for money laundering, as they do not grasp the full concept of how this digital currency works. News articles like the one in De Morgen is not something digital currency users need to worry about, unless they have been using Bitcoin for this kind of illegal activity in the past.

What To Do With 1,100 Seized Bitcoins?

In early 2015, the Belgian government seized a total of 1,100 bitcoins as a result of an investigation. Even though the digital currency is not recognized as an official currency, it is hard to decide what they should do with the funds. This is another reason why a proper regulatory framework is needed for Bitcoin, even if this effort starts out from the prospect of addressing money laundering.

It remains to be seen how the Belgian government decides to treat Bitcoin in the near future, and what the regulatory framework will look like. The popular digital currency is not subject to taxation right now as decided upon by the EU, but the growing interest in Bitcoin by Belgian consumers will impact the economy in the long run.

What are your thoughts on this decision by the Belgian government? Are they doing the right thing by looking at regulating Bitcoin? Let us know in the comments below!

Source: De Morgen (Dutch)

Images courtesy of Shutterstock, Cues

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Belgian Government Aims To Prevent Bitcoin Money Laundering