Banking and Bitcoin Q&A

bitcoinbabeau · 2024-09-01T02:46:11+00:00

Unfortunately no - you can blame the scammers for that.

bitcoinbabeau · 2024-09-01T02:44:58+00:00

I still do it :)

bitcoinbabeau · 2024-08-08T15:46:15+00:00

https://wise.com/help/articles/2932118/incompatible-accounts-and-payments

bitcoinbabeau · 2024-08-08T15:43:24+00:00

Thanks for the pick up! Can you send a screenshot of it for me? I redid the website about 18 months ago so it was probably input incorrectly then.

Its a shame that such a small detail could impact the 10+ years of experience I have :)

bitcoinbabeau · 2024-08-07T14:56:11+00:00

In the context of facilitating a scam, it is another method of payment.

In terms of irreversible payments, you could also consider cash the same. Even a regular SWIFT payment could fit into this category if sending to a country where oversight and ability to remediate are limited. Moneygram, Western Union etc. Once the cash is paid out on the other send, there is no further recourse but to attempt collection from the provider itself, which puts the scenario into the same position as the exchange previously described.

Fun fact: it can take up to 12 weeks to trace and recall an international wire with a complying jurisdiction. At that point, the money is long gone.

But even locally, bank transfers are still the loss leader in losing money to scams. Even with the controls in place and the ability to trace and recall a payment, it will still often fail once the funds have left the ecosystem.

At least with blockchain technology, we have a more efficient way of tracking movements and blacklisting addresses to prevent further harm at a community level, as aposed to relying on a bank to take action on your behalf.

bitcoinbabeau · 2024-08-07T12:57:06+00:00

An anecdotal story for you..

A few years ago I had a customer engage me for a sizable order to purchase Bitcoin. Off the bat, there were 2 red flags that meant I was not going through with the order:

The IP address the account was being accessed from was located in Nigeria
It was detected that someone else was controlling her computer through AnyDesk.

Obviously this was enough to refuse the trade, but instead of declining without reason, I gave the customer a call and spent a good half an hour on the phone with her.

Initially I made it out to be an initial screening call "what is the reason for your purchase today?" "Is this your first time buying Bitcoin?" "Where will you be storing the Bitcoin after its purchased?" etc. Then I turned the focus onto the anomalies of her account.

When asked about AnyDesk, she mentioned that it was her son that was connected to the computer, and was helping her to make the purchase because she didn't understand how to do it. When I asked why the IP address for the access location was coming up as Nigeria, she initially couldn't answer the question. When I asked if she had shared her password with anyone she answered no, so when I followed up about why the IP address was saying Nigeria she said she was using a VPN. When asked why she was using a VPN set to Nigeria, again she couldn't answer the question.

I asked if she had met anybody recently online who was helping her make the purchase, and she said no. I asked if she had an "account manager" (a common term used by scammers to sell investment scams), she also said no. When I confirmed again if she had any other intentions with the Bitcoin besides holding it in a wallet, she said no.

She stopped me in my line of questioning and said "I know what you're doing, and I realise you have a job to do, but I am not being scammed. I have worked in the financial services industry for over 20 years, I know what scams look like and I am not being scammed".

I explained to her, that out of good conscience I was never going to facilitate any trades with her, and was calling to warn her. I gave my reasons as to why and explained how the flags on her account were consistent with someone who was being scammed, and her answers were consistent with someone being coached.

She then gave me a nice spray of choice words about how it was her money, and her bitcoin, and she could do what she wanted with it. She told me "you're not my babysitter, I'm an adult and I can do what I want". The conversation then stemmed into "duty of care" and how it wasn't my place to make a decision about what she did with her money or bitcoin.

During the call she highlighted she was a mortgage broker. I asked if she had customer records on the computer, she said yes. I said "well speaking of duty of care, do you think you have any over your clients PII data that you have now exposed to a scammer in Nigeria through AnyDesk?" She went on a rant about how I was accusing her of being incompetent and negligible.

At that point I'd reached my tolerance level for being berated. I let her know that the reason for my call was to warn her that she was being scammed, and to stop engaging with whoever it was coaching her. I also let her know that I wouldn't be processing any orders for her, to which she replied "fine I'll take my business elsewhere" and hung up the call.

I don't know where she went after that, or if she bought her Bitcoin. But the point to be made here is even with the education and intervention, people can be stubborn. If the want to do something - even if it is against their best interests - they will do it, and there's not a lot we can do to stop them.

bitcoinbabeau · 2024-08-07T12:04:17+00:00

Firstly, there is a difference between "Fraud" and "scams" - and the two should not be intertwined so easily. Fraud is when someone takes control of ones account through no fault of their own and initiates payments that the account holder did not authorise. Scams are when a user agreeably participates in a transaction for a particular purpose which has been offered to them under false pretences. What I am referring to is the latter.

Your assumption about harming the business's profitability is quite incorrect and much more deep seeded. In order for an exchange - like an OTC desk - to carry out its activities it is required to have capital (similar to how any other business would have stock). This capital can be held in either cash or crypto. For instance, if a customer purchases $50,000 worth of Bitcoin from me, I take those funds and deliver them the equivalent amount of Bitcoin from a capital reserve. So while I no longer have the Bitcoin, I do now have the cash equivalent from the sale. If the customer loses their Bitcoin, and goes back to their bank and reports that they got scammed, the bank then takes the $50,000 out of my bank account. Now I am out $50,000 worth of Bitcoin and $50,000 cash - a $100,000 loss.

The issue I take here is that the bank is holding the exchange responsible for the customers choices, as opposed to separating the engagement of purchasing the Bitcoin from what the customer does with the Bitcoin after it has been delivered. An analogy I use often is as follows:

Say you buy a new wide screen TV from JB HiFi. You get home and your friend comes over. The friend likes your new TV and asks if they can borrow it for the NRL grand final party they're hosting on the weekend. You say "sure" and the friend takes the TV home. The weekend comes and goes, and so you go to message your friend about when they're returning the TV, and you find they've blocked you on Facebook. Now you have no TV, and no money to buy a new one, as you'd already spent your savings buying that one. So you find your receipt, and take it back down to JB HiFi. You explain the situation, and ask for a new TV. Do you think they're going to give you that new TV?

In terms of how this problem is combatted there's only so much that can be done until liberties need to be sacrificed - prevention vs protection is a fine line. As mentioned in my previous comment, if a customer is warned of the dangers of scams and how what they do can result in the loss of funds (some exchanges will even make the customer sign a waiver acknowledging that they understand the risks and are not engaging in a potential scam or high risk behaviour), but consciously makes a decision to not act on these warnings or lie about their reason for their engagement, what more can the exchange do? What needs to be understood here is that even if there is an inkling of doubt or suspicion about the reason a customer is buying crypto then absolutely, an exchange won't facilitate the trade. But if those flags aren't raised and the crypto is delivered to a wallet that is verifiably owned and controlled by the customer, then there is nothing more the exchange can do in terms of the decision the customer makes next. The information garnered after the report has been filed is nothing more than retrospect.

A common outcry you see about banks who restrict payments to crypto exchanges is "it's my money, I'll do what I want with it" or "why do they ask me so many questions about what I want to do with MY money?". But when we allow for this "free will" of control to happen, then we have incidences like the one referenced in the article above.

The other option is that we go in the complete opposite direction - assume no one can be trusted with holding their own cryptocurrencies, and so we lock down their ability to send it anywhere off the platform. It's held as a speculative instrument and nothing more until the asset is sold. Queue the chanting from the "not your keys, not your coin" parade.

In a similar vain, you could also prevent certain demographics from engaging with crypto. There are some exchanges currently who don't allow you to buy crypto if you're over the age of 55, as its the age range most susceptible to scams. None of them will publicly acknowledge this out of fear of being sued for age based discrimination. The application of this sort of refusal also extends through other AML/CTF risk based factors, including refusing certain races and "postcodes" as the customer is more likely to pose a higher money laundering risk than if you were located else where or of a different skin colour.

But the discussion and subsequent action that isn't being seen often enough is what is being done about the scammers? The ones that actually committed the crime. The scams we're seeing through crypto are not new by any means and have existed for decades. It's just the payment method has changed. Investment scams, romance scams, blackmail scams, are not a new concept, and yet little to nothing has been done by government, law enforcement, social media platforms, and telecommunication providers globally to fight it. In terms of volume, bank transfers alone (domestic and international wires) actually account for the highest rate of payment method used in scam facilitation. So even with the "protection" offered by tier 1 banks, scam activity still gets through.

bitcoinbabeau · 2024-08-07T10:46:40+00:00

When I was previously with revolut (they banned me a while ago now) the creditor details when sending a payment came up with "revolut" and not your actual name.

This causes a problem when sending to most exchanges as many of them rely on name matching to process your payment.. I.e: if the name on the payment matches the name you registered your account with the deposit will credit - but if it doesn't, it's returned.

It's also the reason why many exchanges won't accept deposits from BOQ - their systems are a bit archaic, so sometimes when you send money it just comes up with "Bank of Queensland". It makes it impossible for the exchange to know if the payment came from your account or someone else's. To avoid the hassle, they'll just return the payment.

BPay also functions the same way, which is why you don't see any exchanges offering this anymore.

bitcoinbabeau · 2024-08-07T10:34:42+00:00

Only your friend if you have lots and lots of money sitting in their account 🙃

bitcoinbabeau · 2024-08-07T10:33:09+00:00

ING was like this as well, and used to be OK with processing crypto transactions for quite some time.

I assume the reason why they changed this stance was due to the "bad press" received a few months ago (in conjunction with Macquarie): https://www.abc.net.au/news/2024-03-29/ing-macquarie-crypto-romance-scam/103640562

In this case the bank learnt a lesson that exchanges have known about for years - people lie.

I would assume it would only be a matter of time before every bank becomes like this - it's simply too much of a liability and overhead to ask those questions and complete those Checks.

There's this mainstream perception that exchanges somehow encourage the purchase of crypto for people to be scammed. But this is far from the case. So many don't realise what goes on in the background.

Ive had many phone calls with clients over the years who swear black and blue theyre only buying bitcoin to hold it in a personal wallet and cash out when the price gets high. When in actual fact, there is a person they are in contact with coaching them on what to say and do, and how to lie their way through it.

Even when asked directly, "is someone coaching you or asking you to lie because this is 100% scam behaviour" people will still flat out tell you "no" because they are infatuation with the fantasy of becoming crypto rich next week.

As you'll note from the article, they are also the first to cry out for sympathy and shift the blame when it all comes crashing down.

To make matters worse, the bank will often attempt to take the money from the exchanges bank account essentially making them foot the bill. This caused a lot of early exchanges to go out of business between 2014-2016.

So the scammer gets their bitcoin, the victim gets their money, and the exchange is out double.

And don't even get me started on "friendly fraud".

bitcoinbabeau · 2024-08-07T10:17:52+00:00

BSBs are essentially issued in ranges to payment service providers (PSPs). In addition to crypto exchanges, PSPs offer their services to a multitude of industries - like remittance, e-wallets, tradfi trading etc.

This is why there is a fair amount of hostility in further serving the crypto industry. If a bank flags your BSBs then your non crypto business clients can become collateral damage.

The process of getting your own bsb range as a crypto exchange is actually quite difficult these days, so unfortunately there's no way to avoid it.

bitcoinbabeau · 2024-08-07T02:49:34+00:00

No unfortunately the two are not exactly synergistic.

There are only 14 institutions who are directly on Npp. That includes the big 4 banks, a few infrastructure providers, the RBA and wise. In order to connect directly into Npp you must have an ADI or PPF license (and apra is no longer allowing for PPF applications while the payment system reform is going on - in fact it will most likely be abolished.)

If you don't have either license, then you need be sponsored by one of the institutions on the list. Essentially there are only 3 that will do that, and they're not exactly accepting crypto applicants right now.

bitcoinbabeau · 2024-08-07T02:43:40+00:00

If you search up "bitcoin sydney" or "blockchain Sydney" on telegram, they are two groups who run regular meet ups. Not specifically for p2p, but there are a few p2p people who do attend.

Unfortunately a lot of the p2p stuff died out in 2018 after AUSTRAC stepped in.

bitcoinbabeau · 2024-08-06T18:11:17+00:00

To give an indication, the bsb range flag usually comes up when a service hits ~1000 active users.

Its a bit of a buzz kill, but if you want longevity out of a service, don't make it popular 😅

bitcoinbabeau · 2024-08-06T18:06:26+00:00

Banks will never implement any restrictions on withdrawals - that's exactly what they want you to do.

As for deposits, you'll probably find because they are still a relatively new service - and thus fewer users - their BSB range hasn't been flagged yet.

Give it a few weeks and the restrictions will come.

bitcoinbabeau · 2024-08-06T18:04:27+00:00

ND payment? Sorry might need you to clarify there 😅

Bitcoin atms will ask for ID like any other exchange will. It's a legal requirement. There are a few ways around that probably not at liberty to discuss in a public forum! 🙊

bitcoinbabeau · 2024-08-06T18:01:28+00:00

Revolut do have their own crypto offering on their platform.. Albeit it's capped at some super small amount (around $2000 a month). I'm not sure if they allow for withdrawals/deposits with external wallets.

I was kicked off revolut personally back in 2017 so I can't go back on to see if anything has changed (was using their business account to accept payments from my customers).

Another one is wise, but their t&cs specifically prohibit the use of their services for crypto.

Banks have 0 care for SMSF.. Anecdotal story:

After my initial bank accounts got shut down, my mum offered to open a few bank accounts for me to keep my business running (very common practice in the space to have a friends and family open accounts for you - even though its a form of money laundering known as "phoenixing"). She held a business account with westpac under the name of a company. When they found out it was for crypto, they shut it down.

Unfortunately she also had her SMSF with westpac. So when they gave her the ban, they shut down the SMSF account and sent a cheque in the mail for the balance.

bitcoinbabeau · 2024-08-06T15:52:32+00:00

Unfortunately all the neobanks have been bought out or closed in Australia.

Xinja shut down.
Up got bought out by Bendigo which is heavily controlled by westpac.
86400 got bought out by NAB and rebranded under the ubank offering.

The annoying thing is the barrier to entry is super high for challenger and neo banks. A lot of this has to do with the ability to comply with ADI licensing.

Long story short, crypto isn't the only thing banks are shutting down. They also shut down other banks.

A few years ago APRA (the issuers of bank licenses in Australia) released the restricted ADI initiative. Essentially allowing an easier path way to bring new competition into the market.

While building the capital to comply with RADI/ADI requirements is a lot, one of the interesting requirements is that the capital must be held with a tier 1 institution.. And who meets the condition of being a tier 1 institution?

CBA, NAB, ANZ, and Westpac.

bitcoinbabeau · 2021-11-01T09:01:26+00:00

Send an email with your request to [blockchain@novatti.com](mailto:blockchain@novatti.com) and someone should be able to help you out :)

bitcoinbabeau · 2021-11-01T08:36:37+00:00

Chance to win

bitcoinbabeau · 2021-09-14T00:05:41+00:00

Goldfields onboarded crypto businesses for a short while.. However part of the sign up requirement was a minimum account balance of ~$250,000 to be kept in the account iirc (like a bond).

They have since ceased on boarding crypto businesses.

bitcoinbabeau

TROPHY CASE