Banks Have Paid Over $243 Billion in Fines Since 2008, $100 Billion More than Crypto Market Cap
Banks are usually the first institutions to claim that Bitcoin (BTC) and digital assets are used by criminals to launder money or process illegal transactions.
However, banks have also paid large sums of money in fines since the financial crisis in 2008.
Banks Are Against Cryptocurrencies
There are many stories of how individuals struggle with banks when they operate with virtual currency exchanges. If there is a crypto company that needs an account in a bank, the institution may say that they do not provide services to crypto-related firms. Thus, the crypto startup would not be able to operate.
There are many other similar stories, even with individuals that processed a transfer from their exchange to their bank accounts and the bank decided to block the users’ account.
Lamassu is the world’s oldest manufacturer of Bitcoin ATMs. The firm couldn’t operate with banks and they did not receive support to have an account in a banking institution. Because of this reason, the firm decided to move to Switzerland, a country that has very open policies towards digital assets and blockchain technology in general.
One of the reasons why banks do not want to work with digital currency companies is due to the fact that some of them do not follow a clear regulatory framework and do not comply with strict AML rules.
Nonetheless, it is worth mentioning that banks had to pay $243 billion in fines due to illegal practices around the world. That is 70% more than the current crypto market capitalization close to $142 billion.
The CEO of JP Morgan Chase, Jamie Dimon, has always been very negative about Bitcoin and virtual currencies. Nonetheless, the bank is already working with blockchain technology and they have launched a digital asset to make payments and settle transactions amogn customers in a faster way.
Warren Buffet has also attacked Bitcoin in different ways in the last years. He said that there are “charlatans,” money launderers and con-artists in the crypto space. Nonetheless, Wells Fargo, a bank in which Buffet invested in, was fined 93 times due to fraudulent activities since the year 2000.
Banks have been fined not for being compliant with AML procedures and for laundering funds themselves. Bloomberg reported that Deutsche Bank paid around $18 billion in AML fines. At the same time, the bank had its offices raided in November 2018 due to being involved in money laundering. The bank was accused of handling $200 billion of dirty money.
Clearly, the profits banks make by processing illegal activities is much larger than the fines they have to pay to governments and regulatory agencies around the world. Thus, the interest in processing these illegal transactions remains.
Banks know that virtual currencies and crypto startups could damage them in the future and be competitors. The cryptocurrency market is growing and expanding all over the world, it will be interesting to see how banks will adapt to these new technologies and use them to improve their services.