Fiat and Crypto private finance
LIFE SITUATIONS
Unconfirmed origin of funds
Rejected applications to open accounts, blocked accounts, and transaction restrictions on accounts are directly connected to confirming the origin of funds, separately for each source. The bank needs confirmation of the legality of a chain of ownership: the appearance of funds – investment in an asset or assets – conversion back to fiat money, etc. for each source and chain, and this can cause difficulties.
This is sometimes challenging to confirm for crypto assets, since when converting to fiat money, there is not always evidence of the origin of the primary funds used to purchase the crypto.
It is worth adding that if crypto assets were acquired a long time ago and have appreciated during this time, then proving the crypto assets' current value is not the bank’s problem. Accordingly, it is necessary to bring in an independent appraiser or consultant whose opinion the bank trusts.
This stage does not rule out any other AML procedures.
This is sometimes challenging to confirm for crypto assets, since when converting to fiat money, there is not always evidence of the origin of the primary funds used to purchase the crypto.
It is worth adding that if crypto assets were acquired a long time ago and have appreciated during this time, then proving the crypto assets' current value is not the bank’s problem. Accordingly, it is necessary to bring in an independent appraiser or consultant whose opinion the bank trusts.
This stage does not rule out any other AML procedures.
Extortionate conversion fees
Owners of crypto capital don't always understand that the standard path, i.e. complying with the bank's requirements, is the simplest, most effective, and least expensive.
Some people are satisfied with the end result of these schemes, namely fiat money minus service providers' hefty fees. But the capital does not gain freedom of movement outside of the scheme. The scheme itself does not guarantee that banks will not impose blocks or restrictions in the future.
This may suit some, but there is a clear understanding that fiat money received this way will be blocked outside of your current bank because of the need to prove to each subsequent bank the legality of the source of funds. In this case, everything except real estate will raise suspicions. Funds will be blocked and possibly lost forever.
But there are always those who are willing to take risks.
Some people are satisfied with the end result of these schemes, namely fiat money minus service providers' hefty fees. But the capital does not gain freedom of movement outside of the scheme. The scheme itself does not guarantee that banks will not impose blocks or restrictions in the future.
This may suit some, but there is a clear understanding that fiat money received this way will be blocked outside of your current bank because of the need to prove to each subsequent bank the legality of the source of funds. In this case, everything except real estate will raise suspicions. Funds will be blocked and possibly lost forever.
But there are always those who are willing to take risks.
The bank blocks transactions for amounts over $300,000
Small conversions from crypto assets to fiat money are not problematic. But these are one-time solutions that do not allow you to purchase assets over $300,000.
The relevant payments may relate to the acquisition and maintenance of real estate, monthly living expenses, tuition, household staff wages, and other large or fixed expenses.
This task requires bank accounts that are open and function without any restrictions. Moreover, the problem isn't opening the accounts, but rather the unrestricted ability to pay from existing accounts.
Without passing a KYC procedure and confirming the legality of the sources of funds, this task cannot be accomplished.
The relevant payments may relate to the acquisition and maintenance of real estate, monthly living expenses, tuition, household staff wages, and other large or fixed expenses.
This task requires bank accounts that are open and function without any restrictions. Moreover, the problem isn't opening the accounts, but rather the unrestricted ability to pay from existing accounts.
Without passing a KYC procedure and confirming the legality of the sources of funds, this task cannot be accomplished.
Opening a business in another country
Sooner or later, crypto assets appreciate so much that the owner begins to think about investments, including in fiat assets and financial instruments.
In terms of complexity, investing or opening a business in another country can be compared to opening bank accounts. The only difference is that the corresponding procedures include the need to confirm the ultimate beneficiary, i.e. a UBO (Ultimate Beneficial Owner) procedure, as well as the need to confirm the origin and value of crypto assets.
The subsequent opening of bank accounts is the logical next step in setting up a company or investment account. In addition to confirmation of the source of funds, the beneficiary's business and personal reputation plays an important role in this process. Every effort is made to ensure not only that the companies (investments) do not have nominal owners, but also that the capital of such owners has a legal origin.
In terms of complexity, investing or opening a business in another country can be compared to opening bank accounts. The only difference is that the corresponding procedures include the need to confirm the ultimate beneficiary, i.e. a UBO (Ultimate Beneficial Owner) procedure, as well as the need to confirm the origin and value of crypto assets.
The subsequent opening of bank accounts is the logical next step in setting up a company or investment account. In addition to confirmation of the source of funds, the beneficiary's business and personal reputation plays an important role in this process. Every effort is made to ensure not only that the companies (investments) do not have nominal owners, but also that the capital of such owners has a legal origin.
The bank is blocking funds without explanation
Opening a bank account is only part of the problem. After that, the bank receives the funds you converted from crypto assets in a regular bank account and often blocks them, or, alternatively, allows them to be transferred to your account at another bank and then the funds are blocked there. Why?
The first possibility is that the selected bank is located in a country that is unfavorable for withdrawing crypto into fiat money. In some countries, some banks block fiat money as soon as they realize that it has been transferred from crypto.
Another possibility is that the bank was not satisfied with the results of the KYC procedure. If KYC fails, then there is no SoW nor documents confirming the sources of the funds. Hence, the block. To establish an increase in the value of crypto assets, independent consultants or appraisers must be involved.
Any amount not demonstrated by the bank will be blocked, and the same thing will happen with each subsequent bank that the money is transferred to. At this point, there is a global risk of losing the blocked funds if the bank does not accept the explanations and documents regarding the disputed amount.
If the bank doesn't understand the situation, it may also respond by limiting spending based on the amount blocked in the account. The bank itself determines the daily disbursement limit. This situation is also related to the issue of the origin of funds, and carries the risk of losing any disputed amounts.
The first possibility is that the selected bank is located in a country that is unfavorable for withdrawing crypto into fiat money. In some countries, some banks block fiat money as soon as they realize that it has been transferred from crypto.
Another possibility is that the bank was not satisfied with the results of the KYC procedure. If KYC fails, then there is no SoW nor documents confirming the sources of the funds. Hence, the block. To establish an increase in the value of crypto assets, independent consultants or appraisers must be involved.
Any amount not demonstrated by the bank will be blocked, and the same thing will happen with each subsequent bank that the money is transferred to. At this point, there is a global risk of losing the blocked funds if the bank does not accept the explanations and documents regarding the disputed amount.
If the bank doesn't understand the situation, it may also respond by limiting spending based on the amount blocked in the account. The bank itself determines the daily disbursement limit. This situation is also related to the issue of the origin of funds, and carries the risk of losing any disputed amounts.
Potential for loss of assets when they are transferred to family
Opening a bank account is only part of the problem. After that, the bank receives the funds you converted from crypto assets in a regular bank account and often blocks them, or, alternatively, allows them to be transferred to your account at another bank and then the funds are blocked there. Why?
The first possibility is that the selected bank is located in a country that is unfavorable for withdrawing crypto into fiat money. In some countries, some banks block fiat money as soon as they realize that it has been transferred from crypto.
Another possibility is that the bank was not satisfied with the results of the KYC procedure. If KYC fails, then there is no SoW nor documents confirming the sources of the funds. Hence, the block. To establish an increase in the value of crypto assets, independent consultants or appraisers must be involved.
Any amount not demonstrated by the bank will be blocked, and the same thing will happen with each subsequent bank that the money is transferred to. At this point, there is a global risk of losing the blocked funds if the bank does not accept the explanations and documents regarding the disputed amount.
If the bank doesn't understand the situation, it may also respond by limiting spending based on the amount blocked in the account. The bank itself determines the daily disbursement limit. This situation is also related to the issue of the origin of funds, and carries the risk of losing any disputed amounts.
The first possibility is that the selected bank is located in a country that is unfavorable for withdrawing crypto into fiat money. In some countries, some banks block fiat money as soon as they realize that it has been transferred from crypto.
Another possibility is that the bank was not satisfied with the results of the KYC procedure. If KYC fails, then there is no SoW nor documents confirming the sources of the funds. Hence, the block. To establish an increase in the value of crypto assets, independent consultants or appraisers must be involved.
Any amount not demonstrated by the bank will be blocked, and the same thing will happen with each subsequent bank that the money is transferred to. At this point, there is a global risk of losing the blocked funds if the bank does not accept the explanations and documents regarding the disputed amount.
If the bank doesn't understand the situation, it may also respond by limiting spending based on the amount blocked in the account. The bank itself determines the daily disbursement limit. This situation is also related to the issue of the origin of funds, and carries the risk of losing any disputed amounts.
