Limits of anti money laundering laws (Binance)

Cryto_AL

What's the problem then?

The problem is funds being frozen after providing proof of where the money came from and them demanding to see private financial data that has no baring on teh funds in question.
So what exactly is the limit of AML questioning by companies?
We have multi layers of consumer law which are primary law and supercede the unwarented invasion of privacy by both government and commercial entities. So where is the line?
In my mind the line is very simple: they get may one or two step of seperation ie it cam eto them from a bank. That bank is regulated, so they have no right to ask for details from athat bank, the previous bank, the sale before the 1st bank, an email you sent to someone in 2011 saying you were interested in buyin BTC etc.
They seem to think they can access everything to satisfy thier own noseyness and pretend its for AML compliance.

masonic

Cryto_AL said:

eskbanker said:

Type_45 said:
I don't think much of anything is physically in places like the Cayman Islands.  It's a legal thing.

It's one thing to airily dismiss that as "a legal thing" but when it comes to a discussion about, er, the law (as it pertains to AML and data protection), then the applicable legal jurisdiction is actually rather important....

Indeed and the juristiction is the UK and they are regulated by the FCA.
too many people here seem to think this is the wild west and crypto comapnies can do whatever they want.
they cant, they are still covered by regs and UCC law.

Are you sure? Binance does not appear on the list of registered cryptoasset firms at the FCA: https://register.fca.org.uk/s/search?predefined=CA

The only "Binance" listed on the FCA register is "Binance Markets Limited", which has this to say about its own activities from its latest accounts:

While the FCA has this to say in an enforcement notice effective since 25 June 2021: "Binance.com is a platform providing various products and services to global customers. Some of these products and services are regulated outside the UK, while others are not. Binance Markets Limited is a UK based company which has not yet carried on any business. BINANCE MARKETS LIMITED IS NOT PERMITTED TO UNDERTAKE ANY REGULATED ACTIVITIES IN THE UK."

I doubt you are dealing with the UK entity, but if you are, then this activity is unlawful and should be reported to the FCA. Much more likely you are dealing with the main Cayman Islands company, which runs binance.com and is unregulated itself, but outsources its regulated activities to other companies.

As for "UCC law", if you mean the "Uniform Commercial Code (UCC): a comprehensive set of laws governing all commercial transactions in the United States", this would have no bearing on a consumer relationship between a Cayman Islands company and a UK citizen.

masonic

Cryto_AL said:

What's the problem then?

The problem is funds being frozen after providing proof of where the money came from and them demanding to see private financial data that has no baring on teh funds in question.
So what exactly is the limit of AML questioning by companies?

UK companies are required to freeze suspicious funds under the Proceeds of Crime Act 2002. This allows financial accounts to be frozen for effectively 40 days while an investigation in conjunction with the NCA is conducted. Then the Criminal Finances Act 2017 allows the NCA to apply to a Crown Court for this period to be extended by up to 6 months, providing an investigation is ongoing and needs more time. It has already been pointed out that evidence of a property transaction in and of itself may be insufficient to determine the funds are clean, without evidence of where the funds to purchase the property came from. It is highly unusual for a property not to be purchased in conjunction with a significant mortgage, which is paid down over a number of years from the buyer's regular monthly income.

That's the situation in the UK. For UK customers, Binance uses the eMoney services of Skrill, which is a UK regulated company and MLR registered. The need to comply with this UK legislation with respect to the fiat transfer will probably be coming from Skrill.

It would be unwise not to cooperate fully with the investigation, as obstructing it is only going to delay the release of funds, should they be legitimate. If an individual has reservations sharing financial information with an unregulated company based on an island in the Caribbean, then perhaps that should have given them pause to transfer large sums of money to them in the first place.

Cryto_AL said:

We have multi layers of consumer law which are primary law and supercede the unwarented invasion of privacy by both government and commercial entities. So where is the line?

The Proceeds of Crime Act and the Criminal Finances Act are both primary legislation and supercede any privacy or data protection laws because the latter always have exceptions for law enforcement activities, which this is.

DannyCarey

Cryto_AL said:

What's the problem then?

The problem is funds being frozen after providing proof of where the money came from and them demanding to see private financial data that has no baring on teh funds in question.
So what exactly is the limit of AML questioning by companies?
We have multi layers of consumer law which are primary law and supercede the unwarented invasion of privacy by both government and commercial entities. So where is the line?
In my mind the line is very simple: they get may one or two step of seperation ie it cam eto them from a bank. That bank is regulated, so they have no right to ask for details from athat bank, the previous bank, the sale before the 1st bank, an email you sent to someone in 2011 saying you were interested in buyin BTC etc.
They seem to think they can access everything to satisfy thier own noseyness and pretend its for AML compliance.

They are quite clearly making it as awkward and difficult as possible for you to win, they are trying to keep your money. 

steampowered

Cryto_AL said:

dunstonh said:

Data protection is irrelevant.  AML trumps it.   Your privacy is not above the law.

They can demand what they like to satisfy themselves that the transaction is clean.

No it doesn't. Data protect/privacy laws are primary law based on human rights/common law. AML is secondary statute, commercial law.

When you say things like that, people stop taking you seriously.

Type_45

Crypto is the wild west. I have a significant amount of it, but I always advise others not to bother.

And if you do bother with it then keep your crypto on a cold storage device. Never on exchanges.

Malthusian

Cryto_AL said:

The problem is funds being frozen after providing proof of where the money came from and them demanding to see private financial data that has no baring on teh funds in question.

As previously covered, "property" is not proof of where the money came from. A ridiculous proportion of UK property is dirty money.
Plus, I'm not sure where the money came from is actually the issue now. It may be where your "huge profits" came from. (In a crypto winter?) The request for "personal wealth, Copies of trading activity on other exchnages  and any emails showing my historic involvement in crypto" leans towards that.
Ultimately that's between you and Binance.

So what exactly is the limit of AML questioning by companies?

The limit is whatever is reasonable to establish that the source of funds is legitimate and satisfy the company's legal AML responsibilities.

If Binance has overstepped the limit you can sue them in the Cayman Islands or Hong Kong or wherever, a judge would look at the evidence you have submitted so far, rule that Binance was being unreasonable and order them to release your money.

(Whether Binance complied is an entirely different issue, sovereign citizenship over your money and all that, but that's a different issue to the OP's question. Anyway, if Binance didn't comply with a court order in the jurisdiction it is run from, from that point it would be theft and contempt of court rather than legitimate AML measures.)

Cryto_AL

Finally got it resolved. Had to provide some more but very limited data showing where first crypto holdings sent to binance came from. then the account was unlocked.
Seems the problem that triggered this was twofold. Firstly my wife had singed up for an account about a week before and two account same address had caused a flag. secondly I'd done close to £30M aggrigate in day trading in less than 2 months which was a big increase to my normal trading amount.
Wouldnt normally do anything like that amount but they recently went to zero fee trading on $BTC, so I have been taking advantage and scalping like a madman to increase the bag.
Thanks to all for the input. But TBH pretty shocked at the number of people that think this kind of S### can be done lawfully and there is nothing we can do about it. Makes me wonder why they are giving advice on a consumer site !?

masonic

Cryto_AL said:

But TBH pretty shocked at the number of people that think this kind of S### can be done lawfully and there is nothing we can do about it.

It can be done lawfully and it does get done lawfully. There are many threads posted by people who have their bank accounts frozen for weeks on end, sometimes a few months. It's already been highlighted to you under which laws these investigations are carried out.

Cryto_AL said:

Makes me wonder why they are giving advice on a consumer site !?

You were advised to cooperate with the investigation as there is no point fighting it. You cooperated. Your account was unfrozen. How was it bad advice?

prowla

Cryto_AL said:

Finally got it resolved. Had to provide some more but very limited data showing where first crypto holdings sent to binance came from. then the account was unlocked.
Seems the problem that triggered this was twofold. Firstly my wife had singed up for an account about a week before and two account same address had caused a flag. secondly I'd done close to £30M aggregate in day trading in less than 2 months which was a big increase to my normal trading amount.
Wouldnt normally do anything like that amount but they recently went to zero fee trading on $BTC, so I have been taking advantage and scalping like a madman to increase the bag.
Thanks to all for the input. But TBH pretty shocked at the number of people that think this kind of S### can be done lawfully and there is nothing we can do about it. Makes me wonder why they are giving advice on a consumer site !?

I was going to suggest just giving them the info they require for due diligence; they just needed to confirm the bonafides of the money.

Binance is a reputable company and they went through a whole load of contortions in the past year or two to get UK approval.

They would not have risked their reputation for one account.