To keep each articles integrity in place we have broken this report into individual articles. 
  • PART ONE covers how banks are forcing traders to learn how to launder money or lose there businesses and end up in the unemployment line
  • This article is PART TWO and focused on the sometimes humorous, but very serious and many times harmful process companies and individuals are going through to have a bank account or use certain financial services


Banks And Other Financial Service Culprits

Banks, Google Wallet, NetSpend, Green Dot,  and a mountain of other payment service companies and institutions are aiding in the education of money laundering.

In an attempt to make their own lives easier and scrape by with the least amount of effort in compliance with regulation, these organizations close accounts of P2P traders at the slightest whiff of digital currency involvement.

So instead of actually helping governments combat terrorism and money laundering, they are helping create a new army experienced in the trade.

The Innocent Origin

In general P2P traders never set out to learn how to launder money and many never realize that this a skill they have learned. Fortunately, most of the larger volume traders are honest folks who pay taxes and have no intention of ever doing anything remotely illegal.

P2P traders deal in selling bitcoin in a retail setting more like eBay, Amazon, or one of the 20 or so exchanges specifically designed for, or supporting, P2P trading such as Bitquick or Localbitcoins.

They are also almost never prepared for the onslaught of fraud they are about to experience.

Over the past few years, a basic systematic process has surfaced, and every month new unsuspecting traders waltz right into the slaughter house.

This is the basic breakdown (there are no actual tips on money laundering revealed here, if you are reading this article for that reason, just leave now):


The first few weeks is always promising. You make a great deal of money rather easily and you don't get hit by anything in the way of fraudulent activity, mainly because you really did and just haven't seen it yet.  Thoughts of a part-time hobby wonder into starting a full time business and eventually to the empire you see in your future.

You don't listen to anyone but yourself because the illusion of your success has convinced you that you are the only one on earth doing things correctly.

You laugh at the prices other are charging and wonder how on earth they will manage to survive with a slick individual like yourself entering the market because you can charge so little and still make a profit. You begin dreaming of your domination of the market.

With each passing successful day you thoughts drift into:

This is my calling. I am the one.

As you will soon find out, it is not that easy and no, you are most certainly not the one.

What you probably should have done:

Quit while you were ahead.


This is where you are going to go from eye-popping dreams of financial fortune of such glory that you believe the world will be darkened by your massive pile of money and beg for you to whisper just one word of your wisdom so that they may too be able to even scratch the surface of your monstrous success, to your 1st glitch which essentially slaps your ass back into reality.

Suddenly, the things the experienced traders have been attempting to tell you, but that you ignored, start making a little sense.

What you probably should have done:

Written a business plan.


In this phase, you'll tweak things a bit to overcome that 1st glitch. You most likely lost money and didn't have it to lose so this is also a recovery phase. Unfortunately, you'll still be too green to realize what the actual problem is and continue on to glitch number 2, 3,  and 4. This will likely include scams, account closures, and more loss of money. If you're smart you might have raised your price a bit or quit all together.

What you probably should have done:

Presented and tweaked your business plan in an effort to obtain capital (or if self-funded, began preparation for compliance and legal entity structuring) or decided to abandon the idea all together.


You begin to realize you may have been a tad askew in your world dominance theory back in step one. In this step you begin to realize that this isn't as easy as you thought it was going to be and either give up, never make it to this stage, or you roll your sleeves up, put your head down, and charge forward on a mission.

This mission, of course, will be met with great resistance by opposing forces. The bank, prepaid debit cards, online wallets, and even PayPal. You'll soon realize that everyone you thought was on your team ... isn't

As accounts start closing and you get banned by various organizations, your initial thoughts will be along the lines of:

How dare they! Do they know how much money you have given them?! Empires could have been built with the amount of cash you were going to put in their services!!

...and other equally ridiculous thoughts.

This is the phase you will either get progressively better each week or dismally worse as you are shown the doorway of no return. Most importantly, you start to learn the tricks of navigating the financial system and how to cash cash from point A to point B without losing property, money, or your mind. The only way this can be done independently is by essentially laundering money, but legally to your knowledge. 

As ridiculous it may sound, instead of hiding the fact the funds are obtained from illegal sources (as with the case of money laundering), you have to hide the fact they are coming from legal sources (bitcoin).

Each account closure stings into the next overlapping to deliver a constant spanking comparable to sliding slowly down the edge of a razor blade landing in a pool of salt and alcohol.

You may even see a charge back as late as month 6 and wonder how in the hell it was even possible and most certainly you have realized the PayPal, who you once thought was your pal, is really the Devil!

What you probably should have done:
  1. Closed a seed of Venture Capital, Angel Investment, or Crowdfunding. 
  2. Setup a legal entity in the way of an LLC, S-Corporation, or comparable other legal entity. 
  3. Hired and trained staff, and;
  4. Appointed a qualified BSA compliance officer 
  5. Designed and implemented your processes, training, and AML/KYC programs
  6. Registered with FinCEN (US), FinTRAC (Canada), or related government agency in your country, and submitted any and all applications for required licensing in your region.
  7. Begun to setup and operate on various P2P exchanges
...or if operating as a sole proprietor (and self funded), completed steps 2, 4, 5, 6, and 7.

You should have been really digging in about now, and already ahead of the game instead of where you are.


Assuming you haven't quit and lack common sense of any kind. This is where you do the Perfect Storm movie maneuver. You know the one. It's where George Clooney turns around and goes up against the tallest wave to ever swell on earth. It was also the movie poster.

You have made adjustments and in this phase, likely have an account open with every bank account available (minus the ones you are banned from thanks to the previous 6 months), own every form of prepaid card, and have an account with every known payment service on earth.

You have specific processes in place to avoid getting scammed and obtaining the proper documentation to fight a scam in the event you are scammed. You make it a point to fly under the radar, and start understanding the TOS of every service you use. 

You begin to see actual returns and start having flashbacks of your global rule as you did once back in phase one. An occasional issue with account is easily overcome since you have so many. You're careful to never mention the word "bitcoin" to anyone, and have many aliases.

This is what separates the men from the boys (or girls), and if you make the turn you are in no way, shape, or form considered "home free" by any means, but things will begin to look more positive than negative.

What are the odds? 50/50 maybe? Just keep in mind that it didn't turn out well for the Andrea Gail.

What you probably should have done:

You should have been well on your way and making decent returns. Your operation should be running smoothly and each month you should be gaining ground and becoming more profitable.

Equally, you have several accounts and accept various methods of payments, however without worry of account closure because they are all compliant, and you mitigate risk by addressing issues and with the help and guidance of a qualified compliance officer who knows all of these things.

Your bank officers are aware of your bitcoin trade and instead of hiding it, you freely speak of coin when visiting these establishments.


This isn't necessarily going to happen at this point in time. So assuming it hasn't already happened, this slot is reserved for the big one. The big one comes in two forms.
  1. The big scam or the big block (often at the same time)
  2. The big deal
Over the course of 10 months, and it could happen anywhere between month 2 to 12 (usually the later as you get more relaxed over time) or beyond, but by month 10, it's safe to assume you've either come across an incredible deal that if you can see to fruition, is going to catapult your business to the next level, you been hit with a massive scam (MIM, Charge-back, or similar), or had a massive account closure with no access to the funds within a survivable time-frame.

Either one of these is actually a good thing. 

If you get scammed, or get an large account closed, you will survive somehow. It won't kill you and when you recover you'll either have a nice payday in the end, or have learned a valuable lesson you can't be taught without experiencing it. Either way, it's a game changer.

If you got "the big deal", and managed to complete it legally and without issue, you now have some actual operating capital and that is a game changer.

It's right about this time, after a major event, that you start wondering about legal aspects of what you are doing and think about doing some research on compliance and the law. This is because regardless of what happened, it was so big that it really had to be reflected upon (especially in the event of loss or delay of funds, since you will have a possible 6 month recovery).

What you probably should have done:

Operated compliantly and profitably right through this phase. Big deals and scams are still possible, but the risk mitigation puts thresholds that help avoid them, so they are less apparent. Big deals of course, are generally welcome, but not always the right idea.


Month 11 and 12 could also be months 16 and 17 if you had to wait 6 months to recover from the Big MacArmed with everything you have learned, and after a big item that really put things in perspective, you have gotten to the next stage. 
  1. You are more careful than ever. 
  2. You know every single service TOS by heart
  3. You can moved thousands of dollars daily, virtually undetectable
  4. You're fast, efficient, and making good money
  5. Not even your bank officer suspects a thing
  6. You're an expert at handling law enforcement when they call
  7. Every new payment method gets put through a controlled test 
  8. You research everything and post clear processes for people to follow
You are basically now a certified money launderer, one of the best, and well paid.

What you should be doing

Having an annual board meeting, handing out Christmas bonuses, giving you bank officer a Bitcoin
gift card, and working on next years business plan having had steady growth and profitability.

What you might be doing

You didn't ask for any this nor did you have any aspiration to launder money and the only reason you realize that you are is because usually by month 12 you have contacted a compliance firm to take care of your federal registration and state licensing requirements and have begun to do everything you should have done back in the first place. Part of that is AML training which describes all of the things you do on a daily basis as laundering money. 

You may or may not follow through with it, and if you do, you have all of the potential illegal transactions in the back of your mind, that may come back to haunt you one day. This is the crossroads and what you choose to do here is going to be pretty damn important.

You may also notice that you did everything ass backwards.


This is based on fact and observation over the last few years, but is certainly not a guide of what to do, or not to do, by any stretch of the imagination. Compliance professionals, business consultants, and attorney's should be consulted on all of these items for proper guidance.

It is also important to note that just a few trades annually for personal reasons does not a regulated company make. If this were the case you would never really be worried about it, this is geared for the professionals and serious part-timers.

What the main two points of all of this is that Banks are helping create the very thing they are suppose to be helping the government prevent (and this is the topic of our next article). That's one.

The second is that the glorious get-rich bitcoin trading company idea is just an illusion. Sure, there are certainly profitable companies trading on a P2P level, but they didn't get there overnight and what seems like an easy profit from the outside is actually the result of allot of very hard work, constant training, budgeted fraud loss and prevention, federal registration, and compliance.

That's why the best advice in this article may very well be the last line of Step 1 under what you should have done.

Quit while you're ahead.

Story by dinbits
Published 8/24/2015 3:20 PST
Header image designed by dinbits news
devil images compiled by dinbits news
PayPal logo copyright PayPal
Matrix and Perfect Storm 

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