Finnish Crypto Exchange Risks Collapse As Banks Refuse To Do Business
Finnishcryptocurrency exchange and crypto wallet services provider Prasos Oy is one step from being “frozen”, as most Finnish banks will no longer conduct business with them, Bloomberg reports March 9.
Founded in 2012, Prasos has seen a ten-fold spike of transaction volumes reaching $185 mln in 2017, which became a subject of concern among the banks.
Finnish banks do not have a codified set of regulations surrounding cryptocurrencies and the anonymous nature of cryptocurrency transactions could potentially run afoul of current Finnish anti-money laundering laws (AML). As a result, four banks; S-Bank, the OP Group, Saastopankki, and Nordea Bank AB closed Prasos Oy’s accounts in 2017. For now, Prasos has to manage all its clients’ transactions through one bank.
Tomi Narhinen, CEO of Saastopankki, commented that the anonymous character of crypto operations breaches the AML laws of the European Union (EU).
“In most cases it’s practically impossible or at least very hard to do business with cryptocurrency dealers and exchanges, because it can be impossible to determine the origin of the funds,” said Narhinen.
Prasos’ CEO Henry Brade noted that the company is facing a critical situation. “The risk is that we’ll see our last bank account closed before we can get the next one opened,” Brade stated. “That would freeze our business.”
The legal status of cryptocurrencies in the European Union was cast further into question in December 2017, when the EU decided to more closely regulate cryptocurrency exchanges in order to protect banks against money laundering and tax evasion.
Brade noted that the company has fully adapted AML measures, and it expects the authorities to formulate the necessary regulations.
“We’ve created identification practices, which we have taken into use in March, and they comply fully with anti-money laundering laws and regulations, even though authorities do not even require this from us as our business is not under regulatory obligations.”
Cointelegraph reported in February that Finnish authorities were confused by Treasury guidelines surrounding the storage of 2,000 confiscated bitcoins.