The new EU regulation impose an hyper draconian AML check for every transaction above 1,000 EUR
This same regulation is what is applicable to them that uses centralized exchange, not only do they have the keys to the couns bitbthey can see every transactions details and choose to halt user account, reveal their identity or comply with the government policy on AML law enforcement to freeze and trace a user's identity, when using the centralized exchanges, they have similarities like that of the government bamks that are in custody of our financial assets, the decide and dictate what should be done on user's account amd places embargo.
if you think the AML/KYC regulations are unfair.. just read some exchanges own policies..
usually/morally
if an exchange thinks something is suspicious. an exchange cannot reveal to the user, that the user is under investigation. it is simply suppose to in-house do an investigation to see if the red flags reach a threshold to then report it to government regulators. at this point exchanges do not freeze accounts or give the slightest hint that something is off to the customer. the transactions are allowed through and as long as there has been a report then its all fine and dandy..
if the regulator does their own investigation and sees something suspect or gets corroborating info from other sources. then the authority gets a court order to push an exchange to freeze an account and confiscate the customers funds..
but without this court order. a exchange cannot confiscate users funds..
now heres where things get complex.
a business can have its own business policy(separate to regulation) about what customers should do under the membership of the business. where by again the business should not confiscate or freeze an account under investigation.. but it can without saying why. stop a user from using its service, by allowing them to withdraw their funds and close their account.
again only in a case of a regulator authorised court order can a exchange confiscate users funds and forfeit the users value away from the user.
but here is the thing.
a company "can" set terms that the breach of service contract of allowing the withdrawal to close the account only applies for like 90 days, by which if the person has not withdrawn their funds within 90 days of notification of their terms of service breach. the funds can then be forfeited and kept by the exchange. where other terms then allow the exchange to avoid being sued by the customer because the customer agreed to the terms included clauses such as not holding the exchange liable for losses and not seeking court actions but instead "arbitrations" if they want any chance of returns after the 90 day limit example
.. in short its not a legal forfeit sanctioned by the exchange. instead in simple terms you authorised to donate your funds to the exchange by not claiming them in the terms agreed window of opportunity that was part of the registration policy agreement(terms of service).
to which leave you out in the cold with no method of recompense(unless you have a really good lawyer)
so even if regulators dont see the use of mixers as a crime because there is no evidence that the funds before/during/after a mixer actually came from criminal proceeds, with enough evidential proof to get a court order for. .. the exchange can treat the mixer tainted coins as a red flag violation of the business terms of service. and tell the customer they can no longer use the service and give them just 90 days to get their money out..
(which some privacy loving people use fake emails so wont see these notices triggering the countdown.)
so if you have any funds in an exchange read the terms of service.
note the things outside of the regulatory minimum. but inside the exchanges own policy.
EG its not against the law to not give KYC. but if the exchange has terms that all account holders need to offer out their identity but refuse. then thats the business term of service breach.
yep. although regulations may have a $1k threshold before the regulators would want ID. the only way some exchanges can achieve this is to ID people right at the registration process or allow them to register with basic info. then hook them into KYC to activate the market order service or any service they offer.