Category Archives: bitcoin blast

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Embarrassment for Aussie Bank with $530M AML Fine After Positive Blockchain Spin

The Commonwealth Bank of Australia (CBA) is to pay settlements of USD 530 million for breaching anti-money laundering (AML) and counter-terrorism financing laws, writes the BBC.

The Commonwealth Bank is one of Australia’s big four banks along with Australia and New Zealand Banking Group (ANZ), National Australia Bank and Westpac Banking Corp.

The settlements are being paid to the Australian Transaction Reports and Analysis Centre (AUSTRAC) for failing to report 53,506 bank transactions, improperly monitoring 778,370 accounts for money laundering red flags, and filing 149 suspicious matter reports over a period of three years.

The CBA argues that a single coding error had led to the failure to report the 53,506 transactions and that it wasn’t aware that the bank had violated AML laws, although it did admit to lack of due diligence.

“Our agreement today is a clear acknowledgement of our failures and is an important step towards moving the bank forward. On behalf of Commonwealth Bank, I apologize to the community for letting them down,” said CBA current chief executive, Matt Comyn.

Given bank demands for tougher regulation on cryptocurrencies because of digital currency’s perceived susceptibility to being used for money laundering, this news comes as somewhat of an embarrassment for those banks calling for tougher AML legislation on crypt assets. Endless media reports have suggested that Bitcoin is used for criminal activity.

A recent panel held by the US Senate Judiciary on modernizing anti-money laundering laws discovered that only a small percentage of such activity involves cryptocurrency. Columbia University’s economics professor Edgar Feige cited last month that 50% of the world’s fiat currencies contribute towards illegal activity such as drug and arms trafficking, writes Bitcoinist.

A further embarrassment to the CBA is the fact that two years ago, the now-ousted CBA executive, Ian Narev was extolling the “transformational” potential of blockchain for the bank’s customers:

“Our intention is to be right in the middle of the early stage R&D, because it has the potential to be that transformational for the business – both for customer benefits and for processes and costs,” adding that DLT tech could be, “…more significant than anyone even thought they were. That is something we would expect to pan out over the next couple of years [for distributed ledger technology].”

A CBA ledger built on the blockchain would’ve made it much more difficult to conceal 53,506 transactions, saving AUSTRAC a lot of time and money investigating the breach.

If a court approves the fine, it will be the largest civil penalty in Australian corporate history. The bank, Australia’s largest lender, said it would also cover AUD 2.5 million in legal fees accrued by investigators, according to the BBC.

 

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Global Conference Fireworks Over Crypto

A recent panel discussion at the Milken Institute Global Conference in Beverly Hills became heated when panelists aired their conflicting views on the future of cryptocurrency.

Every seat in the conference auditorium was filled for the discussion which included United States Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo, economist Nouriel Roubini, and Commissioner at the United States Securities and Exchange Commission (SEC) Michael Piwowar.

SEC’s commissioner Piwowar, issued an early warning, making reference to the current argument surrounding ICOs, which has occupied much debate recently, suggesting that if an ICO token is a security it falls into one of three categories:

“The first is the registered public offerings; this is the normal IPO, public offer. We’ve not had anybody register a public offering for an ICO. The next bucket is exempt offerings, so if you have an ICO, you have to fit into one of those types of exempted. And the third bucket is illegal […] if you are not falling into the first two buckets, we’ve said we’re coming after you.”

Piwowar added, “Bitcoin itself is not a security, but these customized tokens for these initial coin offering – most of them are.”

Christopher Giancarlo was upbeat,  suggesting that there should be more respect for the generation’s “new instrument”, referring to cryptocurrencies, and said that rather than derision, markets needed policy initiatives that were “thoughtful and forward-looking”. He continued:

“There is something going on here that is generational… Just as the baby boomer generation lost faith in the leaders that came before them and tried to seek a cultural change in those days through sex, drugs and rock and roll, I think there is a generation that also has lost faith in us that led them through the financial crisis and they see technology as a way of disintermediating institutions for which they don’t have a great deal of respect.”

He went on to explain the CFTC’s problems of applying outmoded regulations to completely new technology.

Nouriel Roubini, tagged as ‘Dr Doom’, an economist known for predicting the 2008 financial crisis, caused friction when describing blockchain as “a glorified Excel spreadsheet” and described investors entering the Bitcoin market “bubble” in 2017 as “suckers.”

His description of decentralization as bullsh*t provoked blockchain entrepreneur Alex Macshinsky to respond, “Everything you just said is irrelevant.”

Ex-CIA cryptographer Bill Barhydt, clearly bemused by Roubini’s comments, retorted with “I don’t even know where to begin”.

 

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