AML, Bitcoin, and the World: Where Do We Stand Today?
The emergence of an open source cryptocurrency called bitcoin in 2009 and the revolutionary effect it’s had since continues to force global economic consideration and change. As with many technological innovations, governments around the world are trying to gauge the staying power of this digital currency and determine how best to regulate it. The former can be answered by simply observing the hundreds of bitcoin alternatives, exchanges and related tools in existence or adopted today. Playing catch-up are regulatory bodies around the world. Each jurisdiction is wrestling with questions of classification, oversight, and consequences for established Anti-Money Laundering (AML) frameworks.
What have we seen thus far, and can that predict where we’re headed tomorrow?
‘Cryptocurrencies’ are a medium of exchange that exists online in a decentralized form, i.e. no central banking authority. As with all currencies and financial transactions, there is an inherent risk of fraud and subsequent efforts to counter it. Traditionally, compliance regulations like Anti-Money Laundering (AML) and Know Your Customer (KYC) are established to eliminate that risk, but applying these standards to virtual currencies varies from country to country as much as the technology’s application itself.
A few recent examples from Europe are case in point. In Spain, bitcoin transactions were officially given financial services status, making them subject to taxation. It has not been formerly classified as legal tender however, leaving the subject open to interpretation whether or not any cryptocurrency can be grouped under Article 2 of the Spanish AML Act. Italy has taken a more explicit route. The Italian Central Bank has stated that digital currency exchanges need not uphold AML policies, but are instead encouraged to do so. The UK, meanwhile, has taken the exact opposite approach. In a move largely seen as legitimizing cryptocurrency, the government announced that all digital currencies will be subject to AML regulations and oversight. Interestingly, major retailers with international reach were no less harmonious – saying one thing about accepting bitcoin but actually doing another.
At this point in time, the primary responsibility of consumers and business alike should be to uphold a minimum standard of security and accountability. It’s unlikely that the mainstream will be ready to use bitcoin or other similar and related technology before then.
Trulioo is a burgeoning start-up that can help. With customers spanning all finserv verticals and coverage across more than 40 countries and 3 billion people, the GlobalGateway real-time identity verification platform reduces fraud, lowers costs, and increases revenue by simplifying the on-boarding and transaction process. For any type of financial operation, bitcoin or otherwise, if eliminating fraud means being compliant under a regulatory body, that is clearly in everyone’s best interest.
Zac is a versatile leader experienced in managing and scaling high-growth companies. He is a veteran of all facets of startup and tech operations, including strategic planning and execution, corporate management, and building high performance teams. His expertise in risk and compliance software continues to drive innovative and effective solutions for businesses operating worldwide. Zac is passionate about fostering changemakers to make an impact and build groundbreaking solutions that are solving our world’s most pressing problems.