Take Special Risk Measures When Dealing In Cryptocurrency – Austrian Regulator

Austrian Regulator Tells Banks to Beware of Cryptocurrency

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  • Austrian Regulator told banks to request documentation for alleged Bitcoin gains.
  • Cryptocurrency transaction is associated with ‘increased’ risk of money laundering.

Austria: The Austrian regulators have given stern warning to Austrian banks to be careful when dealing in cryptocurrencies and should treat transactions in digital currency as being suspicious until otherwise proven.

Also read: Over $500 Million Has Been Accidentally Sent to Ethereum’s Genesis Address

The Austrian financial markets cop, FMA, stated in a letter to lenders earlier this year that the “heightened risk” associated with transacting in cryptocurrencies like Bitcoin means financial institutions must take additional steps of complying with rules against money laundering.

Last month, Austria authorities asked Interpol to help in tracking down suspects in an alleged scam in which about 12,000 Bitcoins (about $138M) may have been stolen.

The FMA letter stated:

“Given virtual currencies’ high degree of anonymity, the risks of money laundering and terrorism financing is elevated. Banks should “pay special attention and take additional measures if needed to recognize such transactions, validate them and review the origin of the funds.”

Under the guidance, financial institutions should:

  • examine whether exchanges with which their clients are doing business are regulated or voluntarily observe rules against money laundering;
  • ask clients who receive proceeds from cryptocurrency transactions to provide evidence of how and at what price they obtained the virtual coins;
  • end customer relationships if it’s not possible to make the recommended checks.

A FMA spokesman confirmed that the body actually issued recommendations to Austrian banks, but declined to go into detail. However, the recommendations by the FMA letter are intended to stop funds from flowing into the banking system without appropriate and adequate screening under the money-laundering rules, and place the responsibility on Austria’s financial institutions to make sure they’re comfortable with their customer’s cryptocurrency business.

Also read: 24-Year-Old Sent to Prison for Trading Bitcoin Without Identifying Customers

Austrian central bank chief, Ewald Nowotny, together with other officials have joined the growing global voices calling for tighter rules on cryptocurrencies. Also Mark Carney, the Governor of Bank of England, stated last week that it’s time to stop the “anarchy” and “hold the crypto-asset ecosystem to the same standards as the rest of the financial system.”

This call does not in any way affect cryptocurrency value or transactions, it only ensures banks and financial institutions becomes more careful and take adequate risk measures against the ongoing cryptocurrency theft and manipulations.

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