A Critical Analysis of the Anti-Money Laundering Measures Adopted by BitGold Inc.

12 Pages Posted: 27 May 2015 Last revised: 10 Oct 2015

Ehi Esoimeme

University of Wales System - Cardiff Law School

Date Written: May 11, 2015

Abstract

PURPOSE – The overriding objective of this study is to increase public and private sector understanding of money laundering and terrorist financing risks associated with internet payment systems with the focus on Virtual Currencies like BitGold as the most vulnerable to abuse because of their popularity, accessibility (to the public), and high volume of cross border trade transactions.

DESIGN/METHODOLOGY/APPROACH - The present study critically analyses the Anti-Money Laundering measures adopted by BitGold Inc. BitGold is a consumer-focused internet platform offering free global payments combined with unprecedented access to secure, redeemable gold for savings. BitGold Inc. is a federally chartered Canadian Corporation regarded by Financial Transactions and Reports Analysis Centre of Canada as a dealer in precious metals and stones. This paper relies mainly on primary and secondary data drawn from the public domain. It also relies on documentary research and empirical research.

FINDINGS - This paper determined that the Anti-Money Laundering measures adopted by BitGold Inc. cannot effectively combat money laundering and terrorist financing. This paper made the following recommendations: i. Verification of customer's identity should also be done via Skype. ii. BitGold's terms and agreement should state expressly the period within which records would be kept iii. BitGold Inc. should create and maintain a comprehensive program to manage the Anti-Money Laundering risks associated with third-party payment processors like Blockchain Limited and Coinbase, Inc. iv. BitGold Customer Due Diligence measures should provide an exemption for low-risk customers.

Keywords: Money Laundering, Virtual Currencies, BitGold

Suggested Citation

Esoimeme, Ehi, A Critical Analysis of the Anti-Money Laundering Measures Adopted by BitGold Inc. (May 11, 2015). Available at SSRN: https://ssrn.com/abstract=2604721 or http://dx.doi.org/10.2139/ssrn.2604721

Ehi Esoimeme (Contact Author)

University of Wales System - Cardiff Law School ( email )

PO Box 427
Cardiff, Wales CF10 3AX
United Kingdom

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