Moneylaundering.com - Amid Growth of Bitcoin ATMs, Banking Chief Calls for Tougher Oversight

Great article carried on Tuesday 6th February's Moneylaundering.com, by Manju Manglani.

Central banks should work with regulators, tax agencies and financial intelligence units to ensure that private lenders “do not facilitate unscrupulous behavior” involving bitcoins and other digital currencies, the head of the Bank for International Settlements said Tuesday.

Agustin Carstens, general manager of the Basel, Switzerland-headquartered consortium of more than 60 central banks, said in a speech in Germany that digital currency exchanges should comply with the same rules as money transmitters and other payment services providers to retain access to the formal financial system.

“It is alarming that some banks have advertised ‘Bitcoin ATMs’ where you can buy and sell bitcoins,” Carstens said. “Same risk, same regulation and no exceptions allowed.”

There are more than 2,000 digital-currency ATMs worldwide, with three-quarters in the United States and one-fifth in Europe, according to Coin ATM Radar, which maps the locations.

Western Union operates digital-currency ATMs in New York. No lenders in Washington, D.C., Madrid or London provide such facilities, according to Coin ATM Radar.

In September, Slovenian bank Hranilnica LON claimed to be the first lender worldwide to sell bitcoins from its existing cash-dispensing machines.

Carstens suggested the unpredictability of Bitcoin—which rose 1,800 percent in value last year, then fell nearly 70 percent from December to January—together with the costs and delays of transacting in the currency casts doubt on its legitimate uses.

“Bitcoins and their cousins seem more attractive to those who want to make transactions in the black or illegal economy, rather than everyday transactions,” said Carstens. “Individuals who massively evade taxes or launder money are the ones who are willing to live with cryptocurrencies’ extreme price volatility.”

Last week, a senior official with the European Central Bank said G-20 members will consider a global regulatory framework to prevent money laundering and terrorist financing through digital currencies.

EU lawmakers agreed in December to extend anti-money laundering requirements to digital currency exchanges and wallets under the Fifth Anti-Money Laundering Directive this spring.