Following Bitfinex’s announcement to disable fiat deposits, more bitcoin exchanges are having the same punt. The other trading platforms have also disabled incoming USD wire transfers, citing canap account and intermediary canap problems.
Deposit Problem Spreading to Other Exchanges
Bitfinex is not the only bitcoin exchange which has disabled fiat deposits. The bitcoin exchange Btc-e has also announced on Twitter that it is not accepting U.S. dollar wire transfers until the end of the month, citing a handelsbank account problem.
The Chinese exchange, Okcoin, is also reportedly having the same kwestie. A Reddit user posted a message supposedly displayed on the user’s account stating that U.S. dollar deposits have bot temporarily suspended since Wednesday “because of the issues with intermediary banks.” The announcement further reads: “Please do not make further deposit spil your wires may be rejected by intermediary banks. Wij are now actively looking for alternatives to resume deposit spil soon spil possible.”
A few other cryptocurrency services and money service businesses are reportedly encountering the same problem spil well.
Third Party Banks De-Risking
Intermediary banks and verslaggever banks are third party banks. The terms are sometimes used interchangeably. Regardless of any slight differences, they both facilitate international fund transfers spil well spil transaction settlements.
When Bitfinex filed a lawsuit against Wells Fargo, it wasgoed exposed that Wells Fargo wasgoed acting spil a verslaggever handelsbank for the Taiwan-based banks which Bitfinex uses.
Big banks have bot known to de-risk verslaggever banking relationships that are considered high risk for their businesses. It is a common problem. According to the World Bankgebouw, “this risk avoidance would typically occur on a wholesale voet, without a case-by-case assessment of the risk associated with individual customers, or the country or region involved, or spil a result of an analysis indicating that the business relationship spil a entire wasgoed no longer profitable. Therefore, it would not be uncommon for a handelsbank such spil Wells Fargo to sever its verslaggever banking relationships with other Bitcoin businesses te the same way it did with Bitfinex.
Taiwan Banks Tightening AML Requirements
Following Wells Fargo’s de-risking decision which only affected outgoing wires, Bitfinex informed customers that all its incoming wires will be “blocked and refused” by its Taiwan banks.
According to an article by Whalecalls, banks ter Taiwan did not previously have rigorous AML/KYC requirements, but they were enough to conform with U.S. regulations. However, the U.S. has recently revised thesis requirements. The U.S. Department of Financial Crimes Enforcement Network (Fincen) is now requiring businesses operating spil a money transmitter to report any suspicious activities. “A report voorwaarde be filed when a transaction that is conducted by, at or through the MSB [money service business] is both: suspicious, and $Two,000 or more,” Fincen wrote on its webstek. Bitcoin exchanges are classified spil money transmitters, according to the agency.
Taiwan’s Premier Lin Chuan
While the U.S. has tightened its control overheen activities of money transmitters, Taiwan also has its own memorándum when it comes to ramping up its AML/KYC efforts. On March 16, the Taiwanese government established an office to combat money laundering to help build a more translucent and orderly financial environment, according to Concentrate Taiwan publication.
It also aims to beef up “money laundering prevention before the third evaluation round of the Asia/Pacific Group on Money Laundering (APG) next year, the publication reported the country’s Premier Lin Chuan telling, adding that Taiwan is presently on the APG see list.
Ter August last year, the Fresh York State’s Department of Financial Services (DFS) fined Taiwan’s Mega Handelsbank US$180 million “for its poor compliance practices, after identifying ‘a number of suspicious transactions’ inbetween the handelsbank’s Fresh York and Panama branches,” the publication further details. The Taiwanese Deputy Justice Minister Tsai Pi-Chung then noted that this incident bruised the credibility of Taiwan’s financial activities worldwide, which should be rectified.
Bitcoin exchanges’ deposit problems began soon after the Taiwanese regulators set up the AML office. While U.S banks are de-risking and Taiwan is determined to regain its credibility, so that it is taken off the APG observe list, the situation is looking grim for any bitcoin exchanges using banks te Taiwan.
What do you think bitcoin exchanges should do? Let us know ter the comments section below.
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