Bitcoin for Anonymity? Stay Away from Argentina’s Banks

EspañolTo prevent money laundering and terrorist financing, the Argentina’s Financial Intelligence Unit (UIF) has ordered a broad array of financial institutions to disclose every transaction that takes place via a digital currency. That is under the authority of resolution 300, as published on Thursday in the Gazette.

The legislation recognizes bitcoin as a growing medium of trade that has gained economic importance in recent times. However, the document contends that these virtual currencies are a risk to the money-laundering prevention system, and therefore they deserve “special attention” and “reinforced monitoring.”

The agency, led by José Sbattella, defines digital currencies as capable of “digital representation of value that is appropriate for digital commerce, and whose functions are to provide a medium of exchange, and/or a unit of account, and/or a store of value.” But it emphasizes that these are not legal tender and are not backed by any country or jurisdiction.

Article 4 stipulates the obligation of entities subject to the norm: banks, foreign exchange agencies, brokerage firms, and others included in Law 25,246. They must submit monthly reports of all transactions with virtual currencies that are made from August 1, 2014.

The key is in Article 15, its third paragraph: “regulated entities … shall report, through the website of the Financial Information Unit, any operations with virtual currencies. The reports referred to in the preceding paragraph shall be submitted ​​monthly on the fifteenth (15) of each month, from September 2014.”

With this measure, the UIF aims to set local standards, as outlined by the Financial Action Task Force (FATF), to address the perceived risks that arise with digital-currency transactions. Anonymity is considered to be one of these risks, because it “prevents the nominative traceability of operations.”

Is This Measure Positive for Bitcoin?

itcoin has a physical presence in Buenos Aires through Bitcoin Space Buenos Aires
Bitcoin has a physical presence in Buenos Aires through Bitcoin Space Buenos Aires. (Bitcoin Buenos Aires)

Franco Amati, cofounder of Bitcoin Space Buenos Aires — a meeting place and coworking site for the Bitcoin community, entrepreneurs, and startups — told the PanAm Post that they have had meetings with UIF staff, and that the UIF presence reflects their interest in the technology behind digital currencies.

“What they told us is that for entities subject to the law (financial institutions, real estate firms, etc.) bitcoin operations should be treated like any other existing operation. So basically they are recognizing that digital currencies are a valid means to carry out large operations, which are the ones of interest to the FIU.”

The entrepreneur said that this legislation does not mean that bitcoin will lose its “recognized liberty and financial privacy, but that a well-defined set of operators, which were already subject to the regulations of the UIF, should continue respecting these regulations even when using digital currencies. It is similar to the regulatory situation that has occurred in most countries,” says Amati.

According to Amati, the resolution reduces uncertainty for banks and other financial institutions, as they now have a clearer picture for offering digital-currency services.

For Carlos Maslatón, an Argentinean financial analyst, this resolution has only one positive aspect: the fact that the Argentinean government recognizes bitcoin as a currency in Article 2 of the resolution.

“The second point, beyond the recognition of bitcoin and other virtual currencies, is the obligation to report their operations. This is the negative aspect of this resolution. They want to know about every operation, in the typical fashion of the all-controlling modern state, especially of the Argentinean state,” he said.

Also, the analyst noted that “selling a property with bitcoins is perfectly possible, as well as paying the bill at a bar that accepts bitcoins, because this virtual currency is not prohibited by the state. It is perfectly legal to generate invoices this way.”

Maslatón underlines that only the entities explicitly mentioned in Article 20 of Law 25,246 must report to the UIF, and he believes the regulators will only pay attention to those of high value. However, the full list is broad and includes: banks, foreign exchange agencies, gambling businesses, brokerage firms, stock brokers, traveler’s checks issuers, money carriers, customs brokers, accountants, and other economic-science professionals.

Translated by Alan Furth.

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