Four out of the five banks that Finnish-based Prasos Oy uses for their business has severed ties with the exchange, citing money laundering fears as the main reason.
Prasos Oy has become a well-known name in the Nordic region’s crypto circuit. The platform relies on the country’s centralized banks to assist in converting their clients’ cryptos into euros. They also run Coinmotion.com and Bittiraha.fi.
Money-Laundering Fears Are the Cause
According to Bloomberg, last year saw a massive blow to business as four of the five banks that Prasos uses closed their accounts with the exchange. The banks in question, S-Bank, the OP Group, Saastopankki and Nordea Bank AB have not directly commented on the closure but did give have some remarks.
Laura Niemi, a manager in the corporate security department at the OP Group, has said that the bank is cautious about the anonymity associated with digital currencies. Tomi Narhinen, CEO of Saastopankki, said:
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.
Even though crypto regulations are not in place for the country, some banks in Finland are steering clear of exchanges as they fear that they are aiding in money-laundering scams.
The issue is that cryptocurrencies offer anonymity, which goes against the European Union’s (EU) anti-money laundering regulations, which have been provisionally extended to include digital countries. These rules include financial institutions requiring both the customer’s name and the source of the money.
Prasos has however sought to assist with this tricky situation:
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 in not under regulatory obligations.
Growth Spurt Sparks Fear
Banks also view last year’s meteoric rise of cryptocurrencies with a healthy dose of doubt. Henry Brade, the CEO of Prasos, has said that Prasos’ own transaction volume increased to approximately $185 million in 2017.
We’ve realized that the growth in international transaction volumes started to disturb the banks. Along the way, we’ve been given very little information by the banks on what we could do to solve the problem.
Regulation Salvation, or Not
Brade hopes that clear regulations in the future will keep its doors open. However, Andrea Enria, the head of the European Banking Authority, believes that it could be more of the same for exchanges as regulators will most likely advise banks to continue giving crypto a wide berth.
Running to the country’s Financial Supervisory Authority (FSA) probably won’t help either. Hanna Heiskanen, a senior advisor at the FSA, had this to say:
Cryptocurrency trading places are not currently under the regulatory mandate of the Finnish FSA. So, it’s an affair between the company and the bank.
Even though Prasos still has the support of POP Bank, Brade still has concerns:
The risk is that we’ll see our last bank account closed before we can get the next one opened. That would freeze our business.
What do you think about the banks closing Prasos’ accounts? Can we expect more of the same from other banks? Let us know in the comments below!
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