cryptocurrencies

International Tax Body to curb Cryptocurrency based Tax Evasion

Tax enforcement authorities from Australia, Canada, the Netherlands, the United Kingdom and the United States have have came together to form a Joint Chiefs of Global Tax Enforcement that will be informally known as J5. One of its major task will be to check on tax evasion being done on profits made via Cryptocurrency. The five relevant tax authorities include the American Internal Revenue Service Criminal Investigation (IRS-CI), the Australian Criminal Intelligence Commission (ACIC) and Australian Taxation Office (ATO), the Canada Revenue Agency (CRA), the Dutch Fiscale Inlichtingen- en Opsporingsdienst (FIOD) and the British HM Revenue and Customs (HMRC).

The five law enforcement agencies have agreed to share intelligence and expertise and to work on joint operations to crack down on professionals who make a living out of enabling tax crime. This inter-government body was formed in response to a request by the Organisation for Economic Co-operation and Development (OECD) to reduce tax crime, calling for action from countries to ratchet up their efforts to prevent such individuals helping organised crime groups and wealthy offshore tax evaders hide income and assets using the global financial system.

Cryptocurrency will be a highlighted source of vigilance for J5, as Cryptocurrency allows for easy international transfers, which is a cause for concern among government agencies due to the difficulty of investigating and prosecuting cryptocurrency-related crimes.

The current Global Tax Enforcement initiative needs to be seen as a first step. It would also be helpful if it was more open and transparent than JITSIC has been for much of its existence. There is a public debate about the competence of tax authorities who now need to be more transparent about what they are doing.

At their first meeting last week, the J5 brought together leading experts in tax and other financial crimes from each of the five member countries. Together they developed tactical plans and identified opportunities to pursue cyber criminals and enablers of transnational tax crime. The J5 will do this through the sharing of data and technology, conducting operational activity and taking advantage of collective capabilities.

The Joint Chiefs of Global Tax Enforcement comes as an unwelcome development to many in the cryptocurrency community. The whole cryptocurrency ethos centers around using decentralized technology to build trustless and incorruptible infrastructures. An announcement made July 3rd, 2018, shows that five countries have joined in the formation of J5 as an attempt to dig deeper into crypto investors and their failure to report profits made.

Johanne Charbonneau, Director General, Canada Revenue Agency said: “The formation of the J5 demonstrates the serious commitment of governments around the globe in enhancing international cooperation in fighting serious international tax and financial crimes, money laundering, and cybercrime through the use of cryptocurrencies. The J5 complements the important international work of the OECD through operational collaboration. Our collective efforts and experience will be shared to jointly identify and address the increasingly sophisticated and global schemes and the professional enablers that facilitate such schemes.”

This is supposedly not the first attempt from such countries. For instance, the IRS of U.S took Coinbase to court, as an effort to get information regarding their customers. This was predominantly done to validate which individuals failed to report their appropriate incomes in their tax returns. While taxes are one thing, the main concern that many country officials fear include any terrorist-based crimes. Especially given the fact that such individuals will be able to finance their assets without getting caught and doing so in a private and secure manner.

On the bright side, this is one more positive sign that will actually push forward the crypto enthusiasts to actually spend cryptocurrency as opposed to just buying them and using it for profit-taking only. The only legal basis for tax evasion using cryptocurrency is when virtual currency is converted to fiat and is not declared to authorities by the crypto enthusiast. When converted into fiat and a person realises profit has been earned on the asset, it is the legal and right thing to subject that profit taxation. By just making profits and conversion to fiat for unprecedented profits, people are actually destroying the decentralized ecosystem instead of supporting it. But by living largely on cryptocurrency, no profits are realized, and no centralized government has a claim over your asset.

ransomware kyc aml shuftipro

Hazards of Ransomware are real for Cryptocurrency Miners

 

Cryptocurrency may well be the future of economic landscape and it has the potential of taking the entire FinTech category to a whole new level. But like any technological advancement, few elements and individuals always crawl out of their holes to make some easy buck by defrauding people. Well, unfortunately, cryptocurrency has also find its proverbial pirates. Cryptocurrency miners are now using ransomware to earn money off the people that might be interested in these new age virtual currencies.

The appeal of cryptocurrency is fueled by the unsubstantiated rise in prices of Bitcoin over the few years. This increase in prices, gave rise to a trend where thousands of tech enthusiasts and people looking to earn easy money, lined up to benefit from Bitcoin bubble. Several of them even opted to mine these coins themselves to get even a better chance of earning sure shot profits. Now, this led to many hackers and online bandits to mine potential ransomware to earn even higher amounts. Some even launched their own coins and virtual currency to even avoid detection by authorities or crypto-vigilanties.

What is a Ransomware?

Ransomware works like a common malware but instead of leading to hacked crucial information or documents, the person attacking your personal computer locks down access to important and vital data. Access to that information is gained by the hacker by successful entry of ransomware to your computer. This can be in the form of a file that you clicked upon or a doctored software that you tried to install on your computer. In order to regain access to their files and important documents, users are asked by hackers to pay them specific amount of money, otherwise, their vital data will be deleted or dumped for good. Ironically, ransomware attackers even ask users to pay them in major cryptocurrencies like Bitcoin so that transactions are not traceable by authorities.

A normal user of Personal Computer might not consider itself to be target of such an attack but trust us, when we say that the extent of hazards attached with ransomware are huge. Your personal photographs, your personal chat history, address books and credentials you use to login to your bank accounts from your home computer are all at risk, if you are attacked by a ransomware.

Businesses and employees working in corporate sector are another regular target of ransomware. A simple click on an unsafe link from a workstation, has the potential to risk entire company’s digital databank and servers. In a recent global attack of ransomware, companies were made to pay millions of dollars to safeguard their important files, documents and data from permanent deletion.

Case Studies of Ransomware via Cryptocurrencies

The out of the box concept of using personal computers for virtual currencies mining is real subtle. Hackers have designed some well guised mining programs that specifically target computers that have either an outdated Operating system or that are using non-effective firewall against such brute force. Typically considered to be stowaways, these ransomware are very hard to detect and payments via cryptocurrencies remain largely untracked. Even when detected, it is very hard to remove and you have no other way to pay them off to rid your computer from these malicious bots. Not to mention, there is this huge blow to the performance of your PC due to a large, yet anonymous, workload.

Although, it seems to be a dangerous path for crypto enthusiasts and people interested in ICOs but in actuality, if you do a proper research before buying cryptocurrencies, you will be safe. Don’t forget to check out reviews for an ICO from some leading crypto enthusiasts. Also make sure that you only invest in an ICO that already has placed stringent KYC and AML compliance measures. To avoid being targeted by hackers, make sure that you are using perfectly updated OS on your personal or work computer. A powerful firewall is also a must-have feature on your computer to ward off unwanted access to your computer.

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ICO

ICOs blocking investors from USA and China – Why and How?

Initial Coin Offerings, more commonly known as ICOs, are all the rage in modern day financial world and virtual investment arena. They provide crypto-enthusiasts a chance to invest in virtual tokens from across the globe and afterwards allow the same investors to benefit from higher demand of these coins. But it might come as a surprise to most people that these hugely in-demand ICOs do not allow buyers from China and USA to bid for their coins. There are several reasons that contributed to ICOs shunning potential buyers from world’s 2 largest economies. Why this ban is imposed by ICOs and how they implement this ban is explained below

Why ICOs ban US citizens?

Banning of US citizens from participating in ICOs has to do with outdated financial and investment policies of US authorities. At the core of this ban is the official designation granted by US to ICOs and tokens offered at these offerings. ICO tokens are defined as securities by US authorities which means that only accredited investors can bid in these ICOs. In case, a non-accredited individual participates in these ICOs, US government will not only proceed against that individual but the ICO conducting company will also be dragged into legal proceedings for allowing such a person in buying “securities” in violation of US Laws.
Although, there is a solution around this problem as well by allowing only accredited investors in the ICO process but that limits the investor pool to such small amount that ICOs prefer to ban US citizens altogether.

Why ICOs don’t allow Chinese Citizens?

In the case of China, its not the outdated policies that led to the banning of chinese citizens from ICOs. It was the successive initiatives of Chinese government in late 2017 and early 2018 that led to ICOs blocking Chinese citizens. Through these initiatives, Government of China blocked access for cryptocurrency and ICO related websites to any person residing within mainland China’s borders. The rationale of chinese authorities was that the digital currency industry was mushrooming at an unprecedented rate which was hard to sustain in a longer run and posed serious dangers to Chinese economy.
China is highly centralized economy with chinese government having a strong control on the entire financial landscape. Before the ban was imposed, there was large scale investments being made by local investors and individuals in ICOs. There were regular ICOs being performed that attracted handsome number of participants. Chinese authorities viewed this ICO trend as a pseudo-black market where transactions were being carried out digitally and the peer-to-peer interactions went against the overall structure of chinese economy. Several analysts are of the view that this step of banning the ICOs from mainland China’s borders is temporary and Chinese authorities want to put in place comprehensive regulations before ICOs or participation in ICOs is allowed again.
So the reason to ban Chinese citizens from ICOs is slightly different but the rationale for ICO conducting entities still remain the same. They don’t want to violate the laws of an economic giant such as China and don’t want to be dragged into International litigations. So they simply prefer to block investors and buyers from China to access their ICO proceedings.

How ICOs Block unwanted investors?

Although, ICOs would love to have investors from world’s biggest financial powers but for now they are forced to ban them in order to avoid backlash from their governments. They mainly do that by a technique called Geo-Blocking. According to this method, a company can ban IPs from all the countries that they don’t want to participate.

Country Restrict Feature for ICOs

To streamline the KYC services for ICOs, Shufti Pro has introduced a Country Restrict feature. This will help ICOs to block investors and bidders from any country of the world including US and China. It is a much more efficient and effective system as compared to Geo-tracking as in this case not only IPs of restricted country will be blocked but the AI and Human Intelligence protocols of Shufti Pro will detect and block a person originating from restricted list of countries.

Shufti Pro is a new age technology that uses machine learning algorithm to identify any person and credentials of that person from every country of the world. Processing via Shufti Pro doesn’t take more than 1 minute and worldwide language coverage further enhances the onboarding process for ICOs.

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