Payments News: E-Gold Under Scrutiny

[Steve Schear]

At 09:47 AM 1/3/2006, R. A. Hettinga wrote:
>  <http://www.paymentsnews.com/2005/12/egold_under_scr.html#more>
>
>  Payments News
>
>  December 31, 2005
>
>  E-Gold Under Scrutiny
>
>  January 9th edition of Business Week contains a lengthy investigative
>  report by Brian Grow on online money transfer systems like e-gold Ltd. The
>  article focuses on the potential use of the e-gold payment service by those
>  wanting to move money while skirting the reporting obligations associated
>  with US money laundering regulations.

There has been quite a bit of on-line discussion about this article and, 
except for a notable competitor to E-Gold, the consensus among DGC users is 
that this article appears to be yet another hatchet-job perhaps encouraged 
by regulators or law enforcement to smear on-line payment services not 
sucking up to authorities.  For example, while its true that E-Gold does 
not do much KYC checks that's not its legal responsibility nor in concert 
with its ToS, which they appear to follow.  Almost all KYC responsibility 
for E-Gold falls on its exchange agents.

The IMF estimates that the "shadow economy" runs from 14-16% of the GDP in 
OECD countries up to 44% in the Developing countries and you can bet very 
little of this is passing through these 'rebel' on-line payment 
services.  Also, its quite simple to use Western Union and other popular 
services with little or no ID for smaller payments (although the details of 
even smaller transactions are probably forwarded to LEOs for scrutiny).

Steve