Bitcoin and AML Compliance

By November 28, 2017AML

Technology is constantly changing and evolving every part of our world, and currency is no exception.  Bitcoin, a new digital currency, is all the rave for those on the cutting edge.  As with any currency, there will be those that try to use it for illegal purposes and will attempt launder their money.  This means that regulation will not be far behind.  Let’s take a look at a story in the news that recently shows the importance of being familiar with this new currency.

Bitcoin is a digital currency that is not backed by a government or central bank and whose value fluctuates according to demand by users. Users can transfer bitcoins to each other over the Internet and store the currency in digital “wallets.

Two men who operate bitcoin exchange businesses have been charged with money laundering for helping drug merchants exchange $1 million in cash for bitcoins, the digital currency, U.S. prosecutors said on Monday.

Federal prosecutors in New York announced charges against Charlie Shrem and Robert Faiella, both operators of bitcoin exchange businesses, for attempting to sell $1 million in the digital currency to users of the underground black market website Silk Road, which was shut down by authorities in September.

It is interesting to note that Winklevoss Capital, which is run by twin brothers Cameron and Tyler Winklevoss, invested in BitInstant in 2012 and led a capital-raising effort last May that raised $1.5 million. The twins, who are best known for their failed lawsuit against Facebook founder Mark Zuckerberg in which they had claimed he had stolen their idea for an online social networking platform at Harvard, have been seeking regulatory approval for a bitcoin exchange-traded fund.

“When we invested in BitInstant in the fall of 2012, its management made a commitment to us that they would abide by all applicable laws – including money laundering laws – and we expected nothing less,” the Winkelvoss twins said in a statement. “Although BitInstant is not named in today’s indictment of Charlie Shrem, we are obviously deeply concerned about his arrest,” they said. “We were passive investors in BitInstant and will do everything we can to help law enforcement officials.”

While bitcoin has been in the market since 2009, it remains a conundrum for some in the investment community.  This is why it is important to have a very clear AML plan in place to ensure your firm is in compliance.  The professionals at Cobia Compliance have over 60 years of experience working the the AML compliance field.  Contact us today so see how we can help your firm.


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