Advice to clients
For the clients of OTP bank, member of OTP Group, in relation to virtual currencies risk
While devising the regulations for fighting against money laundering and financing of terrorism and coordinating the implementation of these regulations, European Banking Authority-EBA and Financial Action Task Force-FATF warned the financial service providers of the high risks related to virtual currencies. Both EBA and FATV advise the banks not to buy, sell or register virtual currencies in their own favour or in favour of their clients, and to increase precautionary measures against those currencies. The NBS also issued an announcement relating to virtual currencies, such is, for example, bitcoin, onecoin and other, so-called “crypto currencies”.
The creation of virtual currencies coincides the world 2008 financial crisis, and its purpose was to eliminate certain risks in international financial systems.
On the basis of the experience from the previous years, virtual currencies bear the following threats to their owners:
- Issuers of virtual currencies are mostly not supervised (they do not fall under the area of work of any supervising authority in any country, therefore they are not subject to any regulations or sanctions), the person or the headquarters of the issuer are not known, in case of any problems relating to the currency there is no authority responsible for handling the complaint (no regulations for the guarantee);
- Their exchange rates are very variable, from the low initial rate they climb up to high amounts, then drop down fast, which means that anyone investing in such currency actually participates in a kind of gambling. Moreover, since these “currencies” can be bought from the platform specialised for that particular purpose, there are no guarantees that the buyer’s account will be credited with virtual currency.
- As the IT systems that store and transfer such currencies are anonymous, there is high risk of money laundering and financing of terrorism involved, and the money path cannot be traced. In cases of high tech extortion, it is well known that the extortionists requested the “ransom” in virtual currencies, in bitcoins.
OTP bank, member of OTP Group, warns its clients of the high risk involved in virtual currencies, their issuers are not subject to the central banks oversight and if they do not execute the payment, there is no one who can compensate the damage incurred to the clients.
We would like to draw our client’ attention to the fact that neither OTP bank nor the members of OTP Group buy, register or sell virtual currencies or accept orders for transfer of virtual currencies. OTP bank, member of OTP Group, in line with the provision under its own GTC, carries out only those transactions which are compliant with its business policy and valid legal regulations, and have the right to suspend or reject carrying out the transactions which are not conformant to any of the above mentioned in any of the phases during their processing.
At the same time, OTP bank, member of OTP Group, recognises and applies – to the possible extent – all new technical solutions which are in the interest of the clients and the Bank, and which enable faster, unbiased and verifiable execution of the client’s orders and contribute to banking solutions through digital innovations.
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