According to its latest report, the co-founder and CEO of the exchange BitMEX, Arthur Hayes, bitcoin is not the preferred option for laundering illegal incomes, as is often argued in the mainstream media. According to him, instead of cryptocurrency, many attackers prefer to use the real estate, especially in Hong Kong and the United States.
In their study, Arthur Hayes cites as an example the situation when someone wants to transfer a million dollars cash in bitcoin. For such an operation, there are two main options: to open an account on the exchange, or to hire the services of dealers on the over-the-counter platform (OTC).
Exchange, able to cope with the volume of liquidity must have serious connections in the banking sector. Banks, in turn, will require a thorough check of all accounts for compliance with rules for combating money laundering and customer identification. Therefore, if the aim is to hide the cash flows to identify the optimal choice is difficult: in case if required by law enforcement agencies, the stock exchange will be obliged to provide customer data.
An alternative option in the form of OTC platforms is possible, but, to the dismay of the cleaners, those who work with really big liquidity, also need to support the banking communication and, accordingly, to comply with KYC / AML.
Will definitely find a not too fastidious in this respect, OTC dealers may. They are willing to close their eyes to these small “misunderstandings” like KYC / AML, however, prefer to work exclusively with cash, and for the very service will have to pay a hefty Commission — and in some cases it can reach 20%. And again the question arises whether these dealers necessary liquidity.
As opposed to attempting to legalize bitcoin income through the real estate market, it may seem strange to someone, turns out to be a very attractive option. Two of the most relevant market – in Hong Kong, where Chinese laundered money, and the United States.
Hong Kong also attracts residents of China as a kind of hedge risks – none of the people of China has no illusions about the possibilities of the government to transform today’s millionaire to a beggar with one tug.
An interesting detail is that said Arthur Hayes, is that while Hong Kong is a party to the Uniform financial reporting standard (CRS), property have been exempted from the list subject to reporting assets, the United States is the agreement simply refused to ratify.
So, in last year’s edition of South China Morning Post wrote that Chinese investors in the effort to evade taxes is invested in property in Hong Kong. USA even can be considered a kind of “Paradise” for those who decided to legalize their money, and to this end turned to local real estate.
A feature of the American real estate market is to purchase property for cash is below a certain amount does not require identification of the buyer or other reputational checks of companies or individuals.
In some places, like Manhattan, this threshold could reach $3 million, and the existence of a problem in the past year, acknowledged the Ministry of Finance of the USA on struggle against financial crimes (FinCEN), naming the estate outright “a machine for the laundering of money.”
Thus, concludes Arthur Hayes, laundering money through cryptocurrencies is very problematic if the person is not eager to share their personal data. Much easier to do it through real estate, given the fact that the agents and brokers are ready to shut eyes to many nuances, including the origin of funds.
Why risks of using bitcoin for money laundering and financing of terrorism is overrated, earlier this year, the magazine ForkLog also said senior lawyer of juscutum Nestor Dubnevich.