On 15 September, Capital Treasury Services advised its clients that it was withdrawing from the supply of payment services to the digital currency sector. 

Over the previous six months Capital Treasury Services had been working closely with the Department of Economic Development, the digital currency community on the Isle of Man and around the globe, local Corporate Services Providers and the banking sector in order to assist in the development of this new industry sector. 

A key aspect of this work included Treasury Services developing enhanced risk management and anti-money laundering (AML) procedures to deal with the complexities of Bitcoin.  This work has involved substantial research into Bitcoin, the ‘blockchain’ process and also the risks arising from Bitcoin transactions.  As a result, Bitcoin businesses were required to provide Treasury Services with additional information about their activities so that a detailed AML/CFT risk assessment could be completed before an investment account was opened.  Currently, there is no requirement for Bitcoin businesses to comply with AML/CFT regulations.  However, Treasury Services only accepted Bitcoin clients that had voluntarily established adequate AML/CFT procedures.  Once an account was opened, individual transactions were monitored closely, although the volume of transactions has been low. 

John Cookson, Managing Director of Capital Treasury Services, commented:

“Treasury Services has been supported by the local banks in relation to the services it provides.  However, it is entirely natural that a new industry will come under increased scrutiny as it starts to develop and grow.  We regret the need to withdraw services to Bitcoin businesses but Treasury Services and the banks operate in a highly regulated environment and it is clear that we have not yet found a complete solution to deal with the particular AML/CFT issues relating to Bitcoin.  However, we will continue to work with the Bitcoin community, and the banks, to explore ways in which financial services can be provided to this new sector.”

Treasury Services remains strong supporters of the Isle of Man Government’s digital currency initiative and was represented at both the ‘Crypto Valley Summit’ on the Isle of Man and also the ‘Inside Bitcoin’ conference in London.