

I Visit Libraries to Sell Bitcoins to Random People from the Internet - danso
http://motherboard.vice.com/read/i-visit-libraries-to-sell-bitcoins-to-random-people-from-the-internet

======
Potando
"nothing could be done over the phone, though I was welcome to walk into a
branch and try my luck there" \- This is sadly common with UK banks. They want
you to go to the branch for all sorts of things that really don't need it, but
the branch is always closed or overcrowded when you have time to get there. It
doesn't help that you have to use your own branch, not any of the others - as
if they don't have a computer network between them? Or perhaps they feel the
local staff somehow remember who you are and what your tedious banking
problems are? Somehow they decide there's no need to be open in the morning,
evening or Saturday afternoons, even though they're turning people away and
squeezing the bloated queue inside the doors so they can get ready to close. I
was also overseas when I was told the only way to get the few thousand pounds
from my account was to go the the branch. Eventually they found another way.

~~~
TeMPOraL
Speaking of bank opening hours, this is something I really don't get. Where I
live, all branches of most of the banks are open only Monday-Friday between
0900 and 1700, which is exactly when most people are at work. Every time I
need to visit the bank in person (and 'till recently my bank didn't have cash
deposit machines), I need to take half a day off at my work.

It's similar with some services, i.e. barbers. What I don't get is how do they
make money when they're opened only when people don't have time to visit them.
There must be something weird going on there, otherwise I'd expect the market
to force them to shift opening hours so that working people could use those
services.

~~~
corin_
Banks basically don't need to innovate on their hours. If all banks are open
similar hours, none of them feel the need to impact their costs by opening
longer knowing that it will just force their competitors to do the same and
level the playing field again, with everyone (banks not customers) losing out.

Barbers, all the ones I've known in a few UK cities have always had at least a
couple of evenings they would open for, if not all evenings (though I
generally go during the day anyway). Presumably because there's so many more
than there are major banks, and because it's a key decision making factor for
consumers - people are more likely to think "I'll get my hair cut at X instead
of Z because it's open when I want a haircut" than "I'll bank with X instead
of Z because some day I may prefer the opening hours". Not sure if my
different experience is based on location or the fact that I generally go to
not-cheap places which wouldn't use the term "barbers" to promote themselves.

~~~
bazookajoes
The commercial banking industry has been watching TD Bank for the past few
years.

Banks compete in 2 main areas: interest rates and services. TD Bank has a far
better service offering than Citibank, Chase, etc. TD Bank offers ATM fee
reimbursement anywhere in the world, much longer branch hours, free coin
counting, nicer employees, etc. And yet TD Bank is not crushing the
competition. TD Bank's better service offering is not enough of a competitive
advantage to offset the stickiness of commercial banking.

A person's main checking account is a pain to transfer for most people. To
change your checking account you need to: 1) Wait days for the new account to
be approved and initial transfer to clear 2) Wait to receive new checks 3)
Reset up your recurring bill payments

The reason that most banks don't innovate is that customers move to better
banks very slowly.

------
timdierks
I am not a lawyer, but the author should consult one. Money transmitting
businesses are heavily regulated in the United States, and operating such a
business without registration and compliance with regulations may be illegal.

These laws are not a joke; there's a reason that all the mainstream Bitcoin
businesses have these constraints, registrations, and rules, despite the way
they impede customers and businesses: "know your customer", anti-money
laundering and Patriot act constraints on terrorism funding are very real and
serious interests of government units with powerful enforcement powers.

Be warned that this is not the same as selling lemonade in the government's
eyes.

~~~
dougddo
IAAL.

I'll cover money laundering first since it seems to get so often repeated
here:

No, exchanging bitcoin for cash, or vice versa, is not in and of itself money
laundering. Replace "bitcoin" with "casino chips". Is every casino in Vegas
behind bars? No. Why not? Because there was no intent to launder, only an
intent to exchange value for value.

Secondly, the concern over bitcoin dealing being a Money Services Business
(MSB) is a little more legitimate. IIRC, FinCEN has already stated that these
sorts of businesses are MSBs, and require all the usual compliance measures
attached to that label. There are also some states that consider bitcoin
trading businesses MSBs as well, on the state level. On a practical level
though, hardly anyone is enforcing these rules. Does that mean there's no
risk? No, of course not; there's definitely a risk. It's just not currently
that large of a risk.

Lastly, with regards to unreported income, that's an issue with any income,
regardless of source. If a stranger handed you $10 out of nowhere, that's
income and you're required to report it. Hell, if you sold some crack to that
stranger in exchange for those $10, you're required to report it. Unreported
income is not a bitcoin specific concern.

~~~
timdierks
I didn't mean it was necessarily laundering, just that there's a number of
regulations intended to detect and control money laundering that may apply to
the author.

------
devindotcom
How interesting. Makes me want to set up a similar service where I am. $500
minimum, mark it up a steady 10% based on price when the order is placed, and
offer to buy the coffee when you meet at the local cafe to make the swap.

Hard to make a living unless you're doing it full time, but the hobby would
pay for itself and then some, and you'd meet some interesting people and learn
your way around the ecosystem.

As for the money... keep the cash! Use the cash! Cash is convenient, cash is
universal! I've been thinking about going all cash for anything but purchases
that must be made online, and even those can be made with prepay cards that
can be bought with cash. edit: a moment of thought reveals you have to put the
cash back into the system somehow or another in order to fund more bitcoins.
So, there's that fantasy shot.

~~~
pmorici
This guy is extremely lucky all that happened to him is that he got his bank
account closed. With the amounts of money he was dealing in, what he was doing
could have easily gotten him arrested.

~~~
devindotcom
I don't understand. What would he be arrested for?

~~~
Padding
It's a complex issue.

Basically, while you are in theory free to move money around as you please -
for yourself or as a service to others - doing so in large quantities will get
you scrutinized. If uppon scrutiny there is any doubt as to from where the
money came or where it went, you'll be flagged for "money laundering". Once
that happens the "authorities" will essentially go with a haircomb through
anything and everything you've ever done, and then, uppon dicsovering that you
are in fact not a criminal, keep on looking until they actually find something
to justify all of that effort they just wasted on you.

------
Shinkei
So can anyone explain why banks would suddenly close an account like that in
the UK? Would they do that in the US? He is despositing a lot of cash and
electronically transmitting money from that account. Wouldn't any small
business that does a lot of cash transactions run into this same problem?

~~~
WillNotDownvote
It happens with US accounts too. Banks have a strong incentive to avoid money
laundering activities, and no real penalty for false positives.

~~~
engendered
_Banks have a strong incentive to avoid money laundering activities_

Most banks have automated systems that flag on certain automated conditions (I
know because I built one). Contrary to some of the posts in here, they do
_not_ want to flag accounts, and most do the absolutely minimal mandated under
AML legislation.

We have no idea why his account was closed, but it is extremely unlikely it
was due to suspected money laundering. If they suspect money laundering, they
legally _must_ report it (this is the case in the US, Canada, and the UK, at a
minimum) to the appropriate government agency, where it will be investigated.
They can't simply say "looks like money laundering, go somewhere else".

As always everyone is operating under very incomplete information.

~~~
desdiv
_We have no idea why his account was closed, but it is extremely unlikely it
was due to suspected money laundering. If they suspect money laundering, they
legally must report it (this is the case in the US, Canada, and the UK, at a
minimum) to the appropriate government agency, where it will be investigated.
They can 't simply say "looks like money laundering, go somewhere else"._

"Fill out AML suspicious activities report" and "close his account" are
mutually exclusive courses of actions. Just because one happened doesn't mean
the other ones didn't happen.

Like you said, we're operating under very incomplete information, so let's not
assume "fill out AML suspicious activities report" didn't happen here.

~~~
engendered
They usually are mutually exclusive, at least in the US and Canada. If an AML
flag is triggered, or there is reasonable suspicion, they have to report it
and are barred from telling you that you've been reported. Kick you out as a
customer would be a great way to undermine the whole AML thing.

It is entirely possible that if he simply had transfers to or from known
Bitcoin entities, that would have triggered it. Not because he did anything
illegal -- Bitcoin isn't currently illegal in most places, and they have zero
onus to report anything in that case -- but that the bank is hedging that
there will be issues that come up in the future and they don't want the
hassle. That they have determined that Bitcoin is going to be a regulation
hassle in the future so they simply want to have nothing to do with it. This
is in no way money laundering, or suspicion of it, and they needn't report
anything -- just tell him to get lost so in a year or two when this becomes a
big thing they have limited their exposure.

~~~
desdiv
>If an AML flag is triggered, or there is reasonable suspicion, they have to
report it and are barred from telling you that you've been reported.

Completely agreed.

>Kick you out as a customer would be a great way to undermine the whole AML
thing.

This is where I think you're overreaching. Do you have a source on this? AFAIK
closing an account isn't against any AML legislations. There's no onus on the
bank keep a suspicious account (whether it's AML related, Bitcoin related, or
just because the bank manager didn't feel like serving this account was
profitable proposition anymore) open even when it's against their financial
interest to do so.

------
Buge
Counterfeit money is a bit risk when doing this. There have been several
stories of localbitcoin sellers receiving counterfeit money.

~~~
driverdan
Assuming you mean big risk, how so? It's very hard to counterfeit modern
currency. Color changing ink, watermarks, and the embedded strip are all hard
to counterfeit especially in tandem.

~~~
glomph
Sure but your average bitcoin trader doesn't have the equipment to pick up on
those features.

~~~
logn
With US bills, you can use one of these... costs $5.50:
[http://www.officedepot.com/a/products/548370/Dri-Mark-US-
Cou...](http://www.officedepot.com/a/products/548370/Dri-Mark-US-Counterfeit-
Money-Detector/)

Also, on $100 bills, Ben Franklin has a ghost image that can be seen holding
up to the light.

~~~
driverdan
NO! BAD! Do not trust the pens. All they do is check the acidity of the paper
which is one of the easiest things to fake.

------
joosters
I don't get it: They say that they started using Bitcoin to help transfer
money overseas, yet later in the article they talk of using TransferWise to
move money abroad (which deals in pounds and dollars, not Bitcoin)

If bitcoin's strength is meant to be its low cost for moving money around, how
come even this Bitcoin peddlar cashes out back into fiat to move it?

~~~
pjc50
He's running an arbitrage cycle, selling bitcoins for pounds. In order to
_get_ bitcoins he's buying them on an exchange with dollars.

------
legulere
> I knew I was playing in a grey area

For me it looks like this is obviously illegal because he conducts a business
without registering one.

~~~
devindotcom
If you bake pies at home and sell them to friends, do you have to register
yourself as a business? There might be benefits to it but he could also just
be self-employed. As long as he declares his earnings and pays taxes on them
there shouldn't be a problem.

~~~
dragonwriter
If it is strictly "to friends" in a way that is not legally to the general
public, possibly not (but if you are soliciting people in public places, then
its probably public sales.) For public sales of food, you probably need both a
business license _and_ separate health clearance for selling food, if your
state law even allows selling food made in a home kitchen (California recently
adopted a law allowing this, with very narrow limits.)

~~~
darkFunction
You can make a certain amount of capital gains in the UK without paying tax.
It's in the region of 10K I think. I guess buying bitcoin at market price and
selling at 'a different market price' counts as capital gains on an investment
until the point where you've made enough money to have to declare it. And this
would be on your tax form at the end of the year.

At least that's how I understand it. I'm not an accountant but have been
unloading a few coins this year and I'm pretty sure I don't need to declare
anything until I make more than a certain amount across all my investments.

[https://www.gov.uk/personal-tax/capital-gains-
tax](https://www.gov.uk/personal-tax/capital-gains-tax)

~~~
Chirael
In the US, as I understand it you wouldn't be able to use capital gains on
this kind of thing because you haven't held the Bitcoins for a year. It would
be "short term capital gain" which would be the same as ordinary income.

The real risk here is that if you don't track all the transactions and report
and pay taxes on the profit (at, likely, ordinary income tax rates), you'll
get nailed for tax evasion.

I imagine (though I have no experience) that this must be similar to having a
marijuana based business. If you want to be legit you have to open a bank
account... but not a lot of banks want to touch a business like that.

You might think you could just lie on the bank account opening form where it
asks about what the business will be doing, and say you're opening a coffee
shop or food cart (something with cash sales), but then you could be nailed
for lying on a form, and since (again in the US) most accounts are FDIC
insured, that could be under the rubric of lying to the Federal government
(not good).

I don't have direct experience with this, IANAL etc., but these are some loose
concepts that come to mind.

Too bad, great idea, classic good example of arbitrage/exploiting market
inefficiencies. I think it's even do-able legitimately, though it's slightly
too far along the risk-reward curve for my taste ATM.

------
edward
Bitcoin article on the Barclays website:

[https://wealth.barclays.com/en_gb/home/research/research-
cen...](https://wealth.barclays.com/en_gb/home/research/research-
centre/compass/compass-apr-2014/evolution-of-modern-money.html)

