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Bitcoin providers forced to comply with anti-money laundering law




The regulation released by the Central Reserve Bank (BCR), which aims to regulate the use of cryptocurrency in the country, will oblige carriers to have a digital identification with which they must provide all the start and end data of the transactions, as well as geolocation, and others.

The regulation released for consultation by the Central Reserve Bank (BCR) to regulate the use of Bitcoin in the country obliges cryptocurrency service provider entities to comply with the Law Against Money Laundering and Other Assets, in addition to carrying a record of the currency bearers’ transactions.

Chapter VII of the regulation develops the regulation for the risk management of money and asset laundering, terrorist financing and the proliferation of weapons of mass destruction.

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“The entities must apply due diligence, which will imply that they implement the procedures and controls, electronically to assess, identify and verify the identity of their customers and final beneficiaries, monitor their operations, in order to adequately manage the risk of LDA / FT / PADM (money laundering, financing of terrorism and proliferation of weapons of mass destruction) ”, says article 43 of the regulations.

The same article establishes that there must be a digital identification that will be carried out by electronic means as a substitute for physical presence with the use of personal data registration, through authentication processes, implication of biometric records, Single Identity Document scans, geolocation, IP address recognition (Internet Protocol), among other rigorous techniques or alternative technological methods of equal rigor, storable and non-manipulable.

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Article 43 of the regulations also establishes that the information must be stored with proof of date and time, being kept in their computer systems, as provided in article 12 of the Law Against Money and Asset Laundering.

These are just some of the regulations established by the regulations on Bitcoin issued for consultation by the BCR in matters of money laundering, financing of terrorism and proliferation of weapons of mass destruction.

But these obligations are already established in the Law Against Money Laundering and Other Assets, which indicates that the obligated parties must maintain for a period of not less than 15 years the necessary records on transactions carried out, both national and international, that allow them to respond with promptness to requests for information from the corresponding inspection and supervision bodies.

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Economists consulted by El Diario de Hoy agree that the regulation aims to give Bitcoin the same treatment as a product or service of the financial system that must comply with the prevention of money laundering, but they raise their doubts that this will work.

For the economist Rafael Lemus, the entire Bitcoin scheme that already works in the world is being forced to marry a figure of a standard financial service or product of traditional banking.

“It is basically breaking with all the philosophy and structure of Bitcoin and taking it in a forced way to the regulation of a banking product, when in reality it is very difficult for international operations to be carried out to local wallets under that modality of a normal banking product. with all the rigor of the money laundering law, that is, the prudential practices that are typical of a traditional financial service ”, Lemus said.




He stated that Bitcoin has been designed and configured to be outside of all that realm, with full freedom and outside the scope of banking supervision. “It’s like trying to put free animals in the zoo,” he illustrated.

For the economist Romel Rodríguez, when he says that banks will have to apply all the regulations for money laundering and risk control to Bitcoin, it is the same as the treatment given to cash.

“Operationally it is very difficult because by its nature Bitcoin can move and trade in operations that are outside the financial system; they want to normalize the use of Bitcoin when, technologically, operations with Bitcoin can be carried out without having to go through these formalities ”, warned Rodríguez.

He said that the article aims to support the security of operations with Bitcoin, but it is difficult.

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“I don’t see how the risk of money laundering is going to be managed and it is going to be done with the wallets that are handled here, but with the wallets that foreigners bring. If I want to sell an asset or a vehicle and someone comes from abroad who wants to buy it from me, how will that transaction be? ”, Rodríguez exemplified.

He added that people use pseudonyms to open accounts in Bitcoin and although the transactions can be seen on the blockchain, it is not really known who is behind each operation.

The economist Luis Membreño pointed out that the chapter and articles related to money laundering and the regulations of the Gafi (International Financial Action Group) want to apply to Bitcoin as it were any other currency. “What this does is that it eliminates the possibility of operating with Bitcoin in El Salvador with this type of regulation. The essence with Bitcoin is that you do not know who is who and what the regulations establish is that you have to know in detail the origin of the funds, the origin of the account, where the money is, to whom it is transferred and how much it is transferred to him ”, he considered.

Since last June, the risk rating agency Fitch Ratings warned that the Bitcoin Law will increase the regulatory, financial and operational risks of financial institutions, including the potential to violate international standards against money laundering (AML, for its acronym in English) and the financing of terrorism.

The renowned American economist Steve Hanke also highlighted in an article published yesterday in Capital Matters that Gafi, the international policeman against money laundering and terrorist financing, will question the operation of Bitcoin in the country.

“From a FATF regulatory perspective, El Salvador has been as clean as the teeth of a bloodhound. That will change if the Bitcoin Law is implemented on September 7, “he said.

He also said that the Gafi will be more aware of the country as a result of the entry into force of the law.

“If you are wondering if the FATF and other regulatory bodies will set their eyes on the dark side of El Salvador on September 7, the answer is an unequivocal ‘yes’,” Hanke said.




TAMMY SEWELL
Tammy Sewell is our Writer and Social at OICanadian.com. Tammy loves sports, she writes our celebrities news. She spends time browsing through several celebs news sources as well the Instagram. Email: [email protected] Phone: +1 513-209-1700

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