Hi there,
I am trading Bitcoin on LocalBitcoins and similar websites. My bank just sent me an email asking me to provide some details regarding the transactions in my account:
- Please explain the origin of the funds received from *Name Surname* (what goods/services the funds have been paid to the account for) and provide relevant documentation (contracts, invoices)
- Explain what kind of relationships you have with *Name Surname*
- what business activity I am engaged in
- From *date* you have sent *amount* to Kraken, Payward Ltd. Please explain the purpose of such transactions.
People send me money to my bank account, I send them their coins. What kind of explanation should I provide to these questions to ensure the sustainability of my account? Especially for the first question; we do not have any contracts, and the only documentation I can get is the invoices from the exchange. Should I be completely open with them or should I try to hide that I am selling cryptocurrency? Maybe there are someone who have had similar experience?
Edited: the country I am located in, crypto is completely legal.
Well as you said you are from a country where crypto is completely legal. But the problem so far is not concerned with crypto or bitcoin. Actually let me tell you how banks works. Generally in all the countries Central Bank & Tax authorities make a certain threshold limit on certain type of accounts and if there is a transaction exceeding that certain threshold then banks are required to report it to the authorities just to assure that transactions were legal and adequate tax compliance have been made of such transfers. For this purpose banks do such KYC on a certain transactions which they are dubious about. Now the thing is that Banks on their own have no power to sue you for anything. So you better first go to your bank and ask what is this all about. And once you are assured it's completely part of procedure then honestly answer all the questions. Don't forget to report taxes on such income otherwise you could be in trouble.