Bitcoin Cryptocurrencies Denmark money laundering

No More Bitcoin for Nordea Bank Employees, Experts Question the Motive


An act of paternalism or a case of generic Bitcoin (BTC) mistrust? It is tough to make out the precise causes for Nordea Bank’s ban on its 31,500 staff buying and selling in Bitcoin or different cryptocurrencies — even on their very own time — a prohibition that was upheld on Dec. 2 by a Danish courtroom.

In a press launch posted by the courtroom following its ruling, Nordea Bank famous that, “Employees are permitted to maintain any current [crypto] holdings,” although it added that they had been inspired to promote them.

As reported by Cointelegraph, Denmark’s finance trade union, Finansforbundet, introduced a class-action lawsuit in opposition to Nordea’s cryptocurrency prohibition in 2018 on the grounds that the ban interfered with staff’ private lives. It seems that the financial institution, the biggest monetary group within the Nordic international locations (Denmark, Finland, Iceland, Norway and Sweden), was anxious that its staff would possibly unwittingly get blended up with some unethical and even legal actions. As a spokesperson for Nordea Bank advised Cointelegraph after the Copenhagen labor courtroom’s choice:

“The marketplace for crypto-currencies is unregulated and never clear. It makes it exhausting to observe the place the cash comes from. It will increase the chance that buyers, together with our staff, might unwillingly become involved in actions which are unethical or outright unlawful.”

He added that, “We are happy that the courtroom dominated in our favour.” In the aftermath of the choice, nevertheless, others accused the financial institution of overreach. Jacob Pouncey, treasurer of the Nordic Blockchain Association, advised Cointelegraph:

“It [the decision] is permitting a company to impede the non-public lives of its staff. It is infringing upon the private freedoms of its staff.”

The financial institution’s prerogative?

In one sense, there’s nothing out of the unusual in Nordea’s prohibition. Some crypto exchanges have prohibited crypto purchases amongst staff, and specialised personnel inside bigger monetary organizations, like commodities merchants, are sometimes topic to restrictions on their private belongings.

Crypto startup Seed CX, as an example, marketed on its web site that it permits: “No private cryptocurrency buying and selling by staff.” Jeremy E. Deutsch, an legal professional from Anderson Kill, advised Cointelegraph he doesn’t essentially see a authorized drawback with the Bitcoin-trading prohibition, “Clearly banks have the power to manage the securities buying and selling of their very own staff, and to have all issues in place to make sure that they’re not participating in insider buying and selling.” What’s uncommon right here, although, is the breadth of the ban. Deutsch stated:

“They’ve banned a complete asset class. It’s not like they’re saying, ‘You can’t commerce in Amerian Express as a result of we’re doing work for them.’ What they’re saying, relatively, is: ‘You can’t personal gold. You can’t personal oil.’ It doesn’t make sense.”

This kind of prohibition is exclusive, within the view of Michael Reuter, co-chairman of the Germany-based European Blockchain Association e.V, who advised Cointelegraph, “It is extremely uncommon {that a} non-public financial institution prohibits buying and selling of crypto currencies for all its [31,000-plus] staff. From our expertise this could possibly be the primary time, ever.”

Nor is that this asset class (crypto) so totally different from extra conventional asset lessons by way of danger adjusted returns as measured by Sharpe ratios, added Deutsch. “What precisely is one defending staff from?” he requested rhetorically. The Danish courtroom’s press launch sought to reply the query “Why is Nordea doing this?” with the financial institution’s personal prior statements:

“Investments in cryptocurrency have been restricted because of the unregulated nature of those belongings which aren’t topic to investor safety laws or authority supervision and associated dangers together with volatility and liquidity danger in addition to monetary crime dangers, e.g. that proceeds that staff would possibly receive from promoting bitcoins derive from legal actions.”

“The drawback with Bitcoins is certainly that they might be used for legal actions and tax evasion,” Daniël Cuypers, a labor regulation skilled at Belgium’s University of Antwerp, advised Cointelegraph. In some circumstances, the sufferer might flip to the financial institution to carry them chargeable for the acts of their staff.

Related: Criminal Activity in Crypto: The Fact, the Fiction and the Context

But what if the cryptocurrency is bought exterior the job, on the worker’s personal time. How does that influence the financial institution? Cuypers answered:

“This should not have any impact on the job. However, it might be that personal actions do have damaging penalties for the job. It is the influence on the job that issues, e.g., if a financial institution worker is arrested for monetary fraud in non-public issues it might have a damaging influence on the arrogance of the [bank’s] purchasers.”

Nordea argued that its staff “might unwillingly become involved in actions which are unethical or outright unlawful actions” if allowed to buy cryptocurrency on their very own time. What’s fallacious with that? In Pouncey’s opinion, “Sure the financial institution has a degree, however why not ban every other exercise that would result in unethical or downright criminal activity, equivalent to shopping for fur coats, consuming, playing, and different vices.”

Reuter from the European Blockchain Association challenged the notion — presumed by Nordea and held by many others as nicely — that Bitcoin is an efficient technique of cost for legal actions:

“Because Bitcoin isn’t an nameless, however a pseudonymous crypto asset, it will be unwise to make use of it for legal actions. From the angle of a legal: she or he can simply be traced again. In principal, this argument appears to mirror a generic mistrust of Bitcoin relatively than a understandable counter-argument.”

Hostile to crypto?

There is a few historical past right here. According to Compliance Week, Nordea Group modified its strategic focus in 2014 from the Baltic states to the Nordic states “partially over issues it was being utilized by its worldwide department clients to launder soiled cash.” It had reportedly been underneath investigation for 3 years for dealing with illicit funds tied to Russian criminals.

In June, Nordea Bank Danmark A/S introduced that its workplaces had been raided by Danish prosecutors underneath suspicion of cash laundering. The financial institution reportedly put aside greater than $106 million to cowl cash laundering probes. Last week, some within the crypto group appeared to really feel that Nordea’s staff had been paying for the financial institution’s transgressions. As Pouncey advised Cointelegraph:

“Nordea has been related to lots of of thousands and thousands of {dollars} price of suspicious cash flows. Would you say any worker working on the financial institution is immediately or not directly participating in unethical or outright unlawful actions just by doing their day by day job that retains the financial institution working? The financial institution ought to concentrate on policing its personal unethical or outright unlawful actions first, then concentrate on its staff’ actions exterior of labor.”

An analyst that goes by the identify “Rhythm” had this comment on Twitter within the wake of the courtroom ruling on Dec. 2, “They advised their employees that ‘the dangers had been too excessive.’ This is coming from the identical financial institution that was raided by police for allegedly laundering $793 million of Russian cash.”

“The crypto trade is lurching slowly towards higher regulation, oversight and transparency,” Deutsch advised Cointelegraph, so for the financial institution to argue that it wanted to guard its staff and defend itself in opposition to an unregulated, opaque market doesn’t actually maintain water (although that declare might need had benefit three years in the past, he allowed).

Deutsch added, “They are inside their rights, however to ban each single worker from buying and selling cryptocurrencies — together with the janitors and individuals who work within the cafeteria — appears bizarre.” Pouncey advised Cointelegraph that the financial institution might have gone too far:

“Owning crypto isn’t unlawful in Denmark, neither is buying it. Yet as a result of I work at a financial institution that has been suspected of laundering thousands and thousands yearly, I’m unable to buy cryptocurrencies regardless of research displaying that solely a small quantity of crypto transactions are literally for illicit functions.”

The Danish courtroom’s choice will probably be appealed, Pouncey stated. This ban is not possible to implement — a Nordea worker may purchase crypto with money or from an account exterior of Nordea visual field — “nevertheless, it’s going to deter individuals,” he stated. Nordea clearly overreacted, within the view of Reuter:

“Cryptoassets are most often unregulated belongings that ought to be addressed in the identical manner as different unregulated belongings. That stated, we don‘t regard this choice as a watershed occasion in the way in which that extra or many banks will comply with.”

Overall, a benevolent studying of Nordea’s controversial Bitcoin prohibition is that it’s a bit clumsy and paternalistic — defending its staff from themselves, because it had been. The darker view is the financial institution is utilizing crypto as a scapegoat for its authorized transgressions.

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