Finnish Exchange at risk due to banking refusals

Prasos Oy, a Finnish Bitcoin crypto wallet services provider is in big trouble. Normally, the dealer exchanges digital coins into Euros with the help of a bank. Four banks; OP Bank, OP Group, Nordea Bank and Saastopankki closed Prasos Oys accounts in 2017. As it is now, Prasos is now conducting all of its transactions through one bank, according to the firm’s CEO Henry Brade.

Banks following the AML rules

Normally, banks are required to conduct their business in strict accordance with the AML (Anti-Money Laundering) regulations of the EU. The anonymity of cryptocurrency transactions is what the banks are not comfortable with. According to Tomi Narhinen, CEO of Saastopankki, in most cases, it is very hard and at times impossible to do business with cryptocurrency dealers and exchanges. This is because it is very hard to determine the source of their funds. In 2017, reported that Prasos’ transactions increased by about ten times (€185 million) and this made the banks suspicious.

In Finland, there is no specific law which stipulates how banks should deal with cryptocurrency dealers. But on the other hand, there are the strict AML rules which require that the lenders should know their customers (KYC) and even the source of their money. Given that cryptocurrency’s key pillar feature is anonymity, this poses a problem for the banks.

Why the banks closed the accounts

In December 2017, a political agreement amongst the EU members was reached. In the agreement, rules on the prevention of money laundering to entities dealing with cryptocurrencies were extended. The agreement is, however, not legally binding. In an effort to remove any misgivings about the origin of the funds, Prasos is working improving client identification.

Andrea Enria, head of the European Bank Authority, indicated on 9th March that the regulator might advise against letting banks interfere with crypto transactions, at least in the meantime. As for Prasos, the situation is a bit dire as Finland’s Financial Supervisory Authority seems unwilling to step in and help the firm.

According to Hanna Heiskanen, senior adviser at the Finish FSA, cryptocurrency trading which doesn’t fall under the regulatory mandate of the Authority means this the matter is between Prasos and the banks.

A look at the Prasos’ website shows that the firm can receive funds in its POP Bank account. However, Brade is worried that the firm’s only remaining account might be closed before they are able to open another one. He fears that if that were to happen, Presos Oys operations and business would come to a halt.

Original article on website is available for reading here.


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