An anonymous Dutch bank employee has revealed that major banks in the EU are applying new rules forcing banks to report, monitor or investigate accounts receiving or sending over €1,000 connected to bitcoin.
Taking to /r/DarkNetMatters, the anonymous user identifies himself as a bank employee within the Dutch banking system. Referencing a memo seen in the bank offices, the user describes how accounts receiving more than €1,000 from known bitcoin-linked accounts should be subject to increased scrutiny, and reported.
Additionally, the whistle-blower writes that the bank also must “flag accounts who have received more than €10,500 per year (outside of salary), and inform [the authorities] if [bank employees] suspect these funds to originate from Bitcoin exchanges.”
The new approach appears to stem from a recent EU directive aimed at “the prevention of the use of the financial system for the purpose of money laundering and terrorist financing.” In this strengthened ruling, and its accompanying documents, the EU Commission lays out a lower €1,000 threshold above which activity is monitored under an anti-money laundering (AML) process. It reads:
“Member States shall apply a maximum threshold per customer and single transaction, whether the transaction is carried out in a single operation or in several operations which appear to be linked. That threshold shall be established at national level, depending on the type of financial activity. It shall be sufficiently low in order to ensure that the types of transactions in question are an impractical and inefficient method for laundering money or for terrorist financing, and shall not exceed EUR 1,000.”
The fear for digital currency users is that the combination of the new lower limit on single transactions (as well as groups of transfers below €1,000 individually) will combine with what the anonymous bank employee describes as a black list of account numbers known to be linked to BTC transactions. The anonymous whistleblower writes:
“We have received a list of IBAN accounts which belong to high volume traders and exchanges. We have to flag any of these if the transfers are above €1k and report them to the financial institution. We also have to flag accounts who have received more than €10,500 EUR / yr (outside of salary), and inform them if we suspect these funds to originate from Bitcoin exchanges.”
The justification of these rules for bitcoin transactions is based upon a fear that the digital currency is being used as a money-laundering device. The Dutch bank report linked to by the whistle-blower contains sections describing how bitcoin can be used to “live-streaming child pornography,” launder money in “online casinos,” and fund “jihadist” terrorism.
These latest revisions to Europe's AML legislation appears to be made with good intentions. Similar rules are in place in America, for example, where FinCEN requires banks to report “structured” deposits over US$10,000. Some digital currency users fear FinCEN could use the rules to catch bitcoin traders.
Considering the volume of such transactions taking place across the Euro Zone everyday, however, it would be rather difficult for the authorities to investigate every transaction, especially if an address holder is still “unknown.” Concerned digital currency users may take reassurance in the fact that in Holland only “84 accounts are flagged and 52 under investigation,” suggesting that the vast majority of users are not caught in these new rules.
Awareness of Bitcoin among Dutch banks is certainly growing. ING Bank Amsterdam will host the Dutch Bitcoin Congress, taking place in Amsterdam June 24. Brunon Bartkiewicz, Chief Innovation Officer at ING Bank, has announced that their tech team has been experimenting with an “XRP-Less Ripple clone” and exploring the use of decentralized (although entirely private) blockchains where the bank controls all of the nodes.