Topic: EU’s 4th AML Directive Aims to make the Payment Ecosystem Crime Free (Read 135 times)
August 27, 2018, 09:23:15 AM
10K Euros for the system to have alerts on AML? I don't think this will work, still transactions below that amount is pretty substantial and it might be more compared to big transactions amounting to above 10k Euros. They should pursue a much stricter rule like frequent random audits to users no matter what transactions they have, if this random audits took place I doubt that there will be more people who has the courage to launder money through the cryptocurrency exchanges, this will scare off a lot of people.
August 27, 2018, 06:56:56 AM
Quote from the link provided :
Quote
An alert and active checking on cash transactions amounting to ten thousand euros has been implemented. This limit has been brought down from fifteen thousand euros. Any transactions exceeding the aforementioned threshold will be considered as ‘obliged entities’. This comes under the extended AML regulations that now place wider range of restrictions on monetary exchanges that are over a particular amount
The 10,000€ is still a big amount and people could still fly under the radar with their cash transactions if they did small tranches of their real transaction multiple times below 10,000€. What they will mostly do is instead of making a whole transaction worth 10,000 they will just do two 5,000€ transactions in order to remain undetected. What if they just monitor or provide a cap on how many transactions you can do everyday it will be more effective compared to only doing the procedure on transactions above 10k.That's correct! There will be loopholes in the system and criminals will be using those loopholes to stay undetected! They will just break down the total amount into smaller transactions and instead of doing two smaller transactions in one day, they will just increase the span and probably make two transactions in a week, so providing a cap on the number of transactions will not help either! Definitely it can reduce the numbers of illegal payments, but still the system is not full proof.
That's where AI can help us to detect illegal payments. AI can help to identify a pattern in criminal proceedings and to identify multiple payments from a single source to multiple destinations while the destination accounts are being operated from a single IP or from similar locations. That's far more complicated in nature. But putting ceiling in the amount or the number of transactions is an ineffective method as compared to today's technological prowess.
I think loopholes are everywhere. It is just the issue of implementation. If they want to do it they should be serious. Otherwise all effect will come on common man.
August 20, 2018, 05:00:16 PM
..What they will mostly do is instead of making a whole transaction worth 10,000 they will just do two 5,000€ transactions in order to remain undetected. ...
Regulators are well aware of this phenomenon.
The practice of splitting up transactions into smaller transactions in order to bypass
reporting is called Structuring / Smurfing.
https://en.wikipedia.org/wiki/Structuring
You will not go undetected if you try this, because banks are also obliged
to report Structuring / Smurfing in most countries in the world.
E.g. they might not report you for making a transaction above the threshold, but they
will report you for suspicious activity, which is even worse for you as a customer
than the standard reporting.
Exactly what banks and the government are doing in my country. On the top of that, the threshold is a little low in some cases. It's a good reminder showing that we don't have a full control over our funds without seeing someone yelling for the sake of AML/KYC.
All the monitoring process is automated, and recently they started to use big data too
August 20, 2018, 04:32:22 AM
Quote from the link provided :
Quote
An alert and active checking on cash transactions amounting to ten thousand euros has been implemented. This limit has been brought down from fifteen thousand euros. Any transactions exceeding the aforementioned threshold will be considered as ‘obliged entities’. This comes under the extended AML regulations that now place wider range of restrictions on monetary exchanges that are over a particular amount
The 10,000€ is still a big amount and people could still fly under the radar with their cash transactions if they did small tranches of their real transaction multiple times below 10,000€. What they will mostly do is instead of making a whole transaction worth 10,000 they will just do two 5,000€ transactions in order to remain undetected. What if they just monitor or provide a cap on how many transactions you can do everyday it will be more effective compared to only doing the procedure on transactions above 10k.That's correct! There will be loopholes in the system and criminals will be using those loopholes to stay undetected! They will just break down the total amount into smaller transactions and instead of doing two smaller transactions in one day, they will just increase the span and probably make two transactions in a week, so providing a cap on the number of transactions will not help either! Definitely it can reduce the numbers of illegal payments, but still the system is not full proof.
That's where AI can help us to detect illegal payments. AI can help to identify a pattern in criminal proceedings and to identify multiple payments from a single source to multiple destinations while the destination accounts are being operated from a single IP or from similar locations. That's far more complicated in nature. But putting ceiling in the amount or the number of transactions is an ineffective method as compared to today's technological prowess.
August 18, 2018, 10:11:06 AM
..What they will mostly do is instead of making a whole transaction worth 10,000 they will just do two 5,000€ transactions in order to remain undetected. ...
Regulators are well aware of this phenomenon.
The practice of splitting up transactions into smaller transactions in order to bypass
reporting is called Structuring / Smurfing.
https://en.wikipedia.org/wiki/Structuring
You will not go undetected if you try this, because banks are also obliged
to report Structuring / Smurfing in most countries in the world.
E.g. they might not report you for making a transaction above the threshold, but they
will report you for suspicious activity, which is even worse for you as a customer
than the standard reporting.
That's right. Even before this 4th AML directive, existing ones already do very well at detecting these.
Not only that - these structures and smurfing are now very easily thrown up by simple, relatively cheap software. A lot of tweaking is done by people to do this - not just splitting up of transactions, but regularly going just under the various limits. These patterns themselves are also red flags (or at least, orange flags). And like you said, in many cases, it is actually far better to properly report going above the thresholds than it is to go below.
The timing of this directive is also coinciding with the enforcement start of GDPR too, so it will be really interesting to see how this plays out with Bitcoin-related enterprises.
August 17, 2018, 07:01:01 AM
Debate for transparency is long but it may completely remove the decentralized concept of bitcoins
August 17, 2018, 03:02:00 AM
..What they will mostly do is instead of making a whole transaction worth 10,000 they will just do two 5,000€ transactions in order to remain undetected. ...
Regulators are well aware of this phenomenon.
The practice of splitting up transactions into smaller transactions in order to bypass
reporting is called Structuring / Smurfing.
https://en.wikipedia.org/wiki/Structuring
You will not go undetected if you try this, because banks are also obliged
to report Structuring / Smurfing in most countries in the world.
E.g. they might not report you for making a transaction above the threshold, but they
will report you for suspicious activity, which is even worse for you as a customer
than the standard reporting.
What I have noticed about rules is that, its not applicable for everybody. Only some set of people decides to put it in place in other to check the excesses of people below them while they live above it. The only way one might run into problem with the bank is when someone specifically report your account or some huge abnormal fund find its way into your account, there is a problem and that is why there is usually a threshold for different types of account that the bank operates for several individuals and the moment your level is not exceeded, you should be fine.
For me, I don't see anything special in the rules being established now because most of this are equally applicable in the fiat world and for anyone properly abreast with the workings of the banking/financial industry would not be surprised at this but because majority of crypto holders having say 30BTC have not been exposed to carry out the dollar equivalent of such transaction in the banking system. And with all of these procedures put in place, so far humans are the ones managing this, there will always be compromise.
August 17, 2018, 02:03:36 AM
..What they will mostly do is instead of making a whole transaction worth 10,000 they will just do two 5,000€ transactions in order to remain undetected. ...
Regulators are well aware of this phenomenon.
The practice of splitting up transactions into smaller transactions in order to bypass
reporting is called Structuring / Smurfing.
https://en.wikipedia.org/wiki/Structuring
You will not go undetected if you try this, because banks are also obliged
to report Structuring / Smurfing in most countries in the world.
E.g. they might not report you for making a transaction above the threshold, but they
will report you for suspicious activity, which is even worse for you as a customer
than the standard reporting.
August 16, 2018, 08:32:12 PM
Quote from the link provided :
Quote
An alert and active checking on cash transactions amounting to ten thousand euros has been implemented. This limit has been brought down from fifteen thousand euros. Any transactions exceeding the aforementioned threshold will be considered as ‘obliged entities’. This comes under the extended AML regulations that now place wider range of restrictions on monetary exchanges that are over a particular amount
The 10,000€ is still a big amount and people could still fly under the radar with their cash transactions if they did small tranches of their real transaction multiple times below 10,000€. What they will mostly do is instead of making a whole transaction worth 10,000 they will just do two 5,000€ transactions in order to remain undetected. What if they just monitor or provide a cap on how many transactions you can do everyday it will be more effective compared to only doing the procedure on transactions above 10k. 
August 16, 2018, 01:26:14 PM
This AML directive focuses on crypto and looking towards more compliances for crypto.
Read more: https://shuftipro.com/blogs/eus-4th-aml-directive-aims-make-payment-ecosystem-crime-free/
Very interesting. As we all know that G20 summit says that they are looking at an October deadline for reviewing AML on crypto. So perhaps this EU guidelines might be very similar to what the G20 will be issuing later this October. There are similarities already I found specially regarding using crypto to fund terrorism. (https://g20.org/sites/default/files/media/communique-_fmcbg_july.pdf), But the bottom line, they are all for transparency.
August 16, 2018, 06:11:56 AM
This AML directive focuses on crypto and looking towards more compliances for crypto.
Read more: https://shuftipro.com/blogs/eus-4th-aml-directive-aims-make-payment-ecosystem-crime-free/
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