Why do I need to disclose the origin of my funds as a Bitpanda user?

Why does Bitpanda have to ask about the origin of my money?

It may feel weird, uncomfortable, and, to an extent, inconvenient if Bitpanda asks you to disclose the source of your funds - the money you plan to invest or trade on Bitpanda and Bitpanda Pro. As the subject of money is highly personal and emotional for most of us, you may feel that Bitpanda checking the source of your funds is overstepping your personal boundaries.

However, at the same time, we need to take all measures to prevent any opportunity for Bitpanda to be used for illegal purposes such as money laundering, terrorist financing, scams or other illegal activities. We will always take the utmost care when provided with the sensitive data you submit to us and are fully in line with the applicable data protection laws. Data protection is a priority for us and Bitpanda will never share your data with others if we are not obliged to do so by law (i.e. cooperating with authorities based on an official order).

Do other providers require me to supply proof of funds?

As a matter of fact, every credible provider of services in the cryptocurrency industry is going to require you, as a user, to supply proof of funds for the fiat currencies or cryptocurrencies you are planning to trade. If a crypto service provider asks you to complete KYC (Know Your Customer) proceedings to verify your account and to provide proof of the source of your funds, this is a hallmark indicating that the provider operates in compliance with current legislative requirements and regulations.

The necessity to ask customers about the source of their funds and collect documentation about it has been a legal obligation and a common standard in the financial industry (e.g. banks, insurance companies) for many years already. Since the 10th of January, 2020, this legal framework has been expanded to cryptocurrency service providers in the EU.

To put your mind at ease, today we have set out to explain everything regarding the subject of “Proof of Funds” and to answer any questions you may have.

Can I avoid providing proof of funds by using another provider?

The simple answer is no. As the crypto industry has been evolving around the globe for a number of years now, similar regulations are being adopted all over the world. Amounts that require proof of funds are subject to the individual situation of each user. In order to ensure that they are complying with legal requirements, users planning to deposit and to trade larger amounts of funds should ensure that they are able to provide proof of funds upon request.

Please note that depositing smaller amounts or executing multiple transactions does not exempt users from supplying proof of funds.

You can read our privacy policy, using the keyword "proof of funds", for further information. This is the privacy policy users accept during the sign-up process. The privacy policy applies during all transactions and also remains valid after amendments.

Why am I required to supply proof of funds and what are the AML5 limits?

Please note that we are not allowed to disclose the limits used for AML5 purposes by Bitpanda due to regulatory requirements and the potential for abuse, as this could result in attempts to avoid the proof of funds process.

AML5 limits are generally based on a multitude of customer-specific factors. The proof of funds process is triggered once your deposits or withdrawals reach a certain threshold but can also be triggered internally if deemed necessary due to risk and/or security aspects.

Therefore, we recommend, especially if you plan on making bigger transactions now or in the future, that you prepare a proof of funds respectively for that transaction amount. You can find a list of accepted proof of funds for fiat and cryptocurrencies here.

What are the legal provisions behind this?

For regulated companies in the European Union, the anti-money laundering directive of the European Union applies. This directive is then implemented into local legislation in each member state of the EU. In Austria, the respective regulation is the Financial Markets Anti-Money Laundering Act. The obligation to check for proof of funds can be found under Article 6 (1) “Scope of due diligence obligations”, particularly “Customer due diligence shall comprise”.

Why should this topic be relevant to me?

There are three main reasons why Bitpanda, as a provider of cryptocurrency trading offers the highest convenience in this regard:

1. Our users want to invest and trade with the goal of making profits which aligns with our goal to increase our trading volume. If you as our user cannot transfer funds, this also hinders our ability to provide you with high liquidity on the broker and the exchange.
2. Our users trust us as a payment provider that offers a secure and reliable trading platform and which has been operating since its foundation in 2014.
3. Our users want to trade and invest 24/7, 365 days a year in a safe environment that is fully compliant with all EU directives and regulation, including compliance with all anti-money laundering measures (AML5).

Why is trust important to us? As Bitcoin is increasingly being recognised as a store of value by mainstream and institutional investors alike, Bitpanda considers it essential to provide all our users with a solid and legitimate realm for carrying out their transactions, not only in terms of outstanding technological security but also regarding legal compliance.

What does proof of funds mean?

Basically, “proof of funds” means that we ask you about the source of your money - your funds - when you register on Bitpanda or when you deposit fiat or crypto.

“Proof of funds” does not only refer to the location where you are sending these funds to our platform from, such as your bank account, but also refers to the way you came into possession of these funds (i.e. you inherited the money and can supply a document proving it or you saved the money and supply us with proof of your salary and your savings account statement).

Here is an example: “I have earned this money through job X and saved it up over time frame Y. Furthermore, you will be able to find proof of its origin here.”

Your funds are the money or crypto you are planning to invest or to start trading with. It could come from your salary, your wages, an inheritance, business profits and so on. You may think this is actually none of our business but we do not ask about your hard-earned cash out of curiosity; it is a legal obligation in order to also exclude illegitimate sources.

Other sources for proof of your funds can be found here. We strongly recommend that you look at the other examples and read this article. If you recognise any sources that are not listed here, please let us know. We appreciate your feedback and would love to answer any questions you may have.

What are the reasons Bitpanda has to know about my funds?

We are required by law to ask you questions for supplying proof of your funds for the following reasons:

• We operate in full compliance with all financial laws and regulations and are required to ask this information from our users
• We ensure a safe and secure environment for more than 2 million Bitpanda users that is free of fraudulent and illegal activities
• We need to verify your account and the source of your funds to ensure your identity has not been compromised and that it is really you who is registering to invest and to trade.

How does Bitpanda support me during the process?

When you register a new account - personal or business - you have to answer a number of questions in a questionnaire online about the funds you are planning to invest and to trade with on Bitpanda and Bitpanda Pro.

Don’t worry too much: this process is as important as it is easy to complete if you have all the documents to hand. To see all details and examples regarding the process, Bitpanda provides the most detailed article about this topic - feel free to compare it to other providers.

What about proof of funds for cryptocurrencies?

If you need to provide us with documentation listing cryptocurrency withdrawals from other platforms (i.e. exchanges, trading platforms or online gambling sites), you have to include the account details with your full name or email address and the name of the platform (origin of the funds) or any other data, such as transaction IDs and other information that allows us to attribute your trades to your person.

What happens with my money if I can’t provide proof of funds?

Please keep in mind that we are legally obliged to conduct a review and we will have to ask you for some form of supporting documentation regarding the source of your funds (as also stated in our terms and conditions). After a final review, you will have the option to withdraw your remaining funds and your account will be deactivated afterwards. In this case, please send us a clear message via our contact form with the respective category selected.

How long will it take to get my money back?

However, you don’t have to fear losing your money in the process and we will also help you as much as possible with submitting your documents. Failure to provide proof of funds can lead to an additional check by our Compliance department, thus this can take some time. Nevertheless, we will release your money as soon as this process is done.

Can I receive support via social media?

Please note that Bitpanda cannot provide account-related support via social media, nor will we share any information regarding pending cases via social media upon request for reasons of data security.

To find all the information you need and all the answers to questions you may have, the Bitpanda Helpdesk is, as always, at your disposal if you need support.

Learn more about Proof of Funds here