It seems that only MtGox actually enforces them. Are they now a PSP or bank?

MtGox says the reason they prohibit wallet-to-wallet bitcoin transfers (yes, they are prohibiting for unverified accounts now - even if you put your coins in there long ago) is because of the AML laws... yet, no other wallet site (that I know of or use) has this restriction, as they all allow me to transfer bitcoins to another address without the need to verification.

So, either MtGox is making up it's own AML rules, or none of the other sites, like Blockchain, for example, are following them.

Does any know what the real deal is with these AML laws? it is all kept very secret. In fact, the AML laws require that the exchange NOT notify the users in advance before the exchange put in place any new restrictions or limits...but only AFTER they are in place.

The real question is... where can I read the AML laws, specifically on how they apply to bitcoins? (although I still find it hard to believe they even Do apply for wallet-to-wallet transaction... but that is what I am told by MtGox)

1 Answer 1


Your question is almost meaningless unless you specify which country's AML laws you are interested in. Some potentially useful pointers:

  1. US Federal Regulation 31, especially Part 1022 about Suspicious Activity Reports

  2. German Gesetz zum Aufspüren von Gewinnen aus schweren Straftaten (Geldwäschegesetz), which translates roughly into Law towards Detection of Profits from serious Crimes (Money Laundering Law).

There is also the question of how to apply these laws. In the US, FinCEN's guidance on Bitcoin (FIN-2013-G001) has a statement that indicates FinCEN views bitcoin exchanges as Money Service Businesses (to which above FR 31, Part 1022 relates). I believe there are multiple interpretations of whether this would apply only where real currencies enter, or if the bitcoin side alone is enough to qualify.

Beyond all this is the practical, rather than legal necessity for customer identification. If an exchange allows anyone to do business on your exchange, you may attract the kind of illicit business that its bank's more elaborate AML procedures might flag as suspicious---which may be one explanation why bitcoin exchanges have, historically, run into trouble with their banks, often getting their accounts closed and having difficulty to find new banking. Dreaming of starting my own bitcoin exchange, I had decided I would need some identification due to these practical issues even before I learnt of legal AML requirements.

I do not think your premise that only MtGox requires identification is correct. I suspect all of their competitors do, even for only handling bitcoin. For their biggest competitor, Bitstamp, I am actually rather certain that they do. However, some of them may have been slower in adopting such measures, and indeed what exactly is required varies, both from country to country and from business to business as some of the anti-money laundering laws seems to require effective measures rather than prescribing anything in particular. A company with more data on their customers or more insight into how to second guess what of their behavior may be suspicious might get away with more selectively seeking information.

Finally, let me address the erratic enforcement you hinted at. Is there any chance you could supply more information about what that term describes in your mind, what led to the idea, etc.? I agree that, at least in the past when apparently no bitcoin exchange even tried to identify their clients, they would, in retrospect, appear to probably have been breaking some kind of legal AML requirement. However, this retrospective outlook is probably unfair and the wrong standard to apply; after all, bitcoin and the comparatively small market was hardly seen as "financial" back then. Law enforcement action, as we have seen in a few cases, naturally depend on police or other government agents becoming aware of the violation, and on a local prosecutor to decide that the specific case is worth pursuing. Whilst a standard involving no chance and no human element might seem best theoretically, I suppose that is not practically possible in our world, or at least not in our legal systems. So if you are talking about erratic actions by the authorities, then I suppose I can only point out that they must proceed on a case-by-case basis---to my own regret, considering I wish for a level playing field for all bitcoin exchanges.

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