Presentation - Virtual Currency - Money Laundry
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Transcript of Presentation - Virtual Currency - Money Laundry
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NPPS NEW PRODUCTS AND PAYMENT SERVICES
Virtual currencies : Bitcoins and others
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THE SIGN OF THE TIMES
They are flexible, efficient and have low transaction costs
However, virtual currencies also present potential AML/CTF risks, such as
The limited identification and verification of participants
The ability to easily conduct online cross-border transactions
The anonymity provided by the trade or transfer
The funding of virtual currency units through illegal cash
Virtual currencies have recently developed into a widely accepted method of online payment
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HOW DO REGULATORS VIEW THE ISSUE?
Currently, virtual currencies are not regulated and are therefore prone to be used for illegal activities. Some governments have prohibited their use, others view them less rigidly.
Regulators around the world are facing a number of challenges with regards to virtualcurrencies and are still seeking to develop and implement AML/CTF regulation for these newpayment products and services.
Virtual currency addresses have no names or other customer identification information
The anonymity provided by transfers makes the users difficult to trace
Protocols do not provide for historical records of transactions
As a decentralised system, there is no central server, service provider or oversight body
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YOU ARE A DIGITAL CURRENCY OR NPPS PROVIDER!WHAT CAN YOU DO?
Although the legal framework is not set, you can already now conduct sufficient efforts to ensure you and your company are not used for illegal purposes, by
Identifying the risks of your business on a risk based approach (RBA) prior to its launch: i.e. risks pertaining to the new technology, the new product, the business practices, your counterparties
Allocating an AML risk classification on a RBA to each of your customers (ongoing activity): risk criteria to include Customer Due Diligence, record keeping, account and transaction limits, geographical and cross-border, potential outsourced services and interaction of service providers
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YOU ARE A DIGITAL CURRENCY OR NPPS PROVIDER!WHAT CAN YOU DO?
Maintaining a continuous follow-up of your customers and their transactions relative to the risk they present
Ensuring regular training to company staff
Ensuring appropriate interaction with the respective authorities
Additional information may be obtained from following sources:
http://www.fatf-gafi.org/topics/methodsandtrends/documents/virtual-currency-definitions-aml-cft-risk.htmlhttp://www.fatf-gafi.org/topics/fatfrecommendations/documents/rba-npps-2013.htmlhttp://www.cssf.lu/fileadmin/files/Publications/Communiques/Communiques_2014/Communique__monnaie_virtuelle_140214.pdfhttp://www.cssf.lu/fileadmin/files/Protection_consommateurs/Avertissements/A_EBA_Monnaies_virtuelles_181213.pdf
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CHARLIE SHREM: BITCOIN ENTREPRENEUR IN THE NEWS
Charlie Shrem, CEO of the Bitcoin payment processor BitInstant was arrested in January 2014 and charged with money laundering and operating an unlicensed money transmitting business.
Shrem is being accused of knowingly selling more than $1 million worth of Bitcoins to a Florida man who in turn sold them to anonymous users of Silk Road, a black market cyber broker, to enable its users to buy and sell illegal drugs, weapons, stolen identity information and other unlawful goods and services.
Shrem is also accused of failing to report these illegal transactions.
The US Justice Department seized the website and approx. 174,000 bitcoins worth $33.6mio.
Recently, Charlie Shrem pleaded guilty to one count of aiding and abetting an unlicensed money transmitting business (Silk Road) and admitted he knew he was doing wrong.
The investigation is ongoing Keep watching this space!
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CDDS PROTECTS YOUR BUSINESS AGAINST POTENTIALTHREATS AND HELPS YOU RESPECT YOUR FORTHCOMINGOBLIGATIONS
AMLspotter Bitcoin, an all-in-onesolution that provides you:
AML risk management
Dynamic KYC / KYT
AML Risk Classification
Manual & Automated name screening
Recurrent monitoring
AML risk dashboard
Detailed reporting