The regulations issued by the Central Reserve Bank (BCR), which aims to regulate the use of digital currency in the country, will require carriers to have a digital identification with which they must provide all the data of start and end of transactions , as well as geolocation, and others.
The regulations issued for consultation by the Central Reserve Bank (BCR) to regulate the use of Bitcoin in the country oblige entities providing digital currency services to comply with the Law Against Money Laundering and Other Assets, a more than keeping a record of the transactions of currency bearers.
Chapter VII of the regulations develops the regulation for the management of risk of money laundering and assets, terrorist financing and the proliferation of weapons of mass destruction.
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“Entities must apply due diligence, which will mean that they implement the procedures and controls, electronically to assess, identify and verify the identity of their customers and final beneficiaries, monitor their operations, in order to manage adequately the risk of LDA / FT / PADM (money laundering, terrorist financing and proliferation of weapons of mass destruction) “, says Article 43 of the regulations.
The same article states that there must be a digital identification that will be performed by electronic means substituting the physical presence using personal data registration, through authentication processes, involvement of biometric records, document scanning unique identity, geolocation, IP address recognition (Internet Protocol), among other rigorous techniques or alternative technological methods of equal rigor, storable and non-manipulable.
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Article 43 of the regulations also states that the information must be stored with a date and time, kept in their computer systems, as provided in Article 12 of the Law Against Money Laundering and ‘Assets.
These are just some of the regulations set out in the Bitcoin regulations issued for consultation by the BCR on money laundering, terrorist financing and the proliferation of weapons of mass destruction.
But these obligations are already established in the Law Against Money Laundering and Other Assets, which states that the obligated subject must maintain for a period of not less than 15 years the necessary records on transactions, both national and international that allow respond promptly to requests for information from the relevant supervisory and supervisory bodies.
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Economists consulted by El Diari d’Avui agree that the regulations are intended to give Bitcoin the same treatment as a product or service of the financial system that must comply with the prevention of money laundering, but raise their doubts that this should work.
For economist Rafael Lemus, the whole Bitcoin scheme that is already working in the world is being forced to marry with a figure typical of a standard financial banking service or product.
“It’s basically breaking with the whole philosophy and structure of Bitcoin and forcing it into the regulation of a banking product, when in reality it is very difficult for international operations to take place towards local portfolios under this modality of a normal banking product with all the rigor of the law of money laundering, that is to say the prudential practices that are the typical ones of a traditional financial service “, has opined Lemus.
He claimed that Bitcoin has been designed and configured to be out of this whole realm, with full freedom and out of the reach of banking supervision. “It’s like trying to put animals that are free in the zoo,” he illustrated.
For economist Romel Rodríguez, when he says that banks will have to apply to Bitcoin all the regulations for money laundering and risk control is the same as the treatment given to cash.
“Operationally it is very difficult because by its nature Bitcoin can move and transact in operations that are outside the financial system; they want to normalize the use of Bitcoin when technologically you can make transactions with Bitcoin without having to go through these formalities “, warned Rodríguez.
He stressed that the article aims to support the security of transactions with Bitcoin, but it is difficult.
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“I don’t see how the risk of money laundering is going to be managed and it can be done with the portfolios that are handled here, but with the portfolios that carry foreigners. If I want to sell an asset or a vehicle and someone from outside comes who m “Do you want to buy it, how is this transaction?”, Rodríguez exemplified.
He added that people use pseudonyms to open Bitcoin accounts and although transactions can be seen in the blockchain, it is not really known who is behind each transaction.
Economist Luis Membreño noted that the chapter and articles related to money laundering and the rules of the FATF (International Financial Action Task Force) are intended to apply to Bitcoin as if it were any other currency. “What it does is eliminate the possibility of operating with Bitcoin in El Salvador with this type of regulation. The essence with Bitcoin is that you don’t know who is who and what the regulations establish is that you have to know- the origin of the funds, the origin of the account, where the money is, to whom it is transferred and how much is transferred to it are detailed “, he considered.
Since last June, risk rating agency Fitch Ratings has warned that the Bitcoin Act will increase regulatory, financial and operational risks for financial institutions, including the potential to violate international anti-money laundering (AML) standards. in English) and terrorist financing.
Renowned American economist Steve Hanke also stressed in an article published yesterday in Capital Matters that the FATF, the international police against money laundering and terrorist financing, will question the operation of Bitcoin in the country.
“From a FATF regulatory perspective, El Salvador has been as clean as a dog’s teeth. That will change if the Bitcoin Act is implemented on September 7,” he said.
He also said that the FATF will be more dependent on the country as a result of the entry into force of the law.
“If asked if the FATF and other regulatory bodies will set their sights on the dark side of El Salvador on September 7, the answer is an unequivocal“ yes, ”Hanke pointed out.