Argentina mandates financial institutions to report virtual currency transactions

Argentina is in economic disarray: record-high inflation numbers, a potential default on its national debt and a significant percentage of the population impoverished. With the central bank printing vast sums of money, the value of its peso has deteriorated, which has led citizens to seek out safe havens, including bitcoin and gold.

The South American country is now possibly responding to this conversion from pesos to bitcoin as the nation’s Financial Intelligence Unit (FIU) – Unidad de Información Financiera (UIF) – has ordered all financial institutions to report all virtual currency transactions to the government, the resolution 300/2014 says.

Argentina FlagThe purpose of the newest regulation is to curtail money laundering and terrorism financing schemes. Moving forward, banks will have to file monthly digital currency reports to the FIU. This is why it is mandating banks to focus on these types of risks that virtual currencies pose and restart its monitoring efforts for customers who deal with digital currencies like bitcoin and litecoin.

It remains unclear as to how these financial institutions will monitor bitcoin transactions.

This is what the resolution, which was passed Jul. 4, states:

“Virtual currencies are often traded remotely online. The movement of assets, and that entities from different countries can participate in the same jurisdictions that do not have controls to prevent money laundering and financing of terrorism, make it difficult for regulated entities to detect suspicious transactions.”

The new rule takes effect in August. Although it could hurt banking clients, it clarifies a great deal for financial institutions that were previously unsure as to how to handle digital currency transactions.

Argentina’s latest initiative comes as Italy announced a new series of warnings pertaining to bitcoin and other cryptocurrencies. Of course, the statements weren’t anything the bitcoin community hasn’t heard before: officials outlining the threats posed by the virtual currency market and how it is prone to illicit transactions and criminal activities.