Thursday, 26 November 2015

Now this is just crazy

From comes this bit of crazy news.
Prediction website iPredict is to be closed down, with the Government deciding it represents a money laundering risk.

The site, run by Victoria University of Wellington, issued a statement to its website on Thursday and on Twitter.

According to the iPredict statement, Associate Justice Minister Simon Bridges refused to grant it an exemption from the Anti-Money Laundering and Countering Financing of Terrorism Act, declaring that it was a "a legitimate money laundering risk" because of the lack of customer due diligence.

The website added that Bridges "formed these views without any discussions with us".

Bridges office could not immediately comment on iPredict's statement.

As well as economic forecasting, iPredict allows traders to place bets on political events. Currently, for example, Simon Bridges is rated as having only a 4 per cent chance of becoming the next leader of the National Party.

Although iPredict said that most of its transactions were small, three traders hold portfolios on the website worth in excess of $10,000. The wbesite claims to have more than 9000 traders including more than 4000 who have deposited $20 or more, although most are understood to be inactive accounts.

One of the site's higher profile traders, Kiwiblog author David Farrar said the decision was hard to fathom.

"Their turnover is teeny. You could only money launder a few hundred [dollars], maybe a thousand, because their's just not enough people," Farrar said, adding that the requirement to give bank accounts or credit card details meant the money should be traceable.

"You could money launder many times larger amounts and much more effectively by going to gaming machines," Farrar added.
What is really going on here? As David Farrar points out the amount of money you could launder is so small that I find it very hard to believe that this is the real reason for the closing down of iPredict. The average trader has a net worth of $41. So what is Bridge's real agenda here?

Given the amount of interesting data that iPredict generates keeping makes sense. It would be nice if the markets were a bit thicker perhaps but on the other hand a thin market, as Farrar notes, does limit the amount of money laundering that could be done via the site.

Seven years of fun and information ends due to stupid government actions.

The statement from iPredict is available here.

1 comment:

Mark Hubbard said...

I'll never forgive this National Govt for its 'insane' money laundering legislation. It's making my life as an independent trustee so impossible (inconvenient) that I've told all clients I want to be out of all independent trusteeships over the next five years. Heaven only knows what the cost of this is to our economy. It's a huge bureaucratic bottleneck of extra costs and wasted time on every financial and property transaction. I'm yet to see what the scale of the problem is they're trying to combat with this, but can guarantee almost it makes no financial sense (and will always be philosophically repulsive.