MONEY LAUNDERING IN CRYPTO
The newest frontiers of money laundering involves cryptocurrencies. They are been used in criminal activities due to their relative anonymity compared with more conventional forms of currency.
Money laundering according to Investopedia, is the illegal process of making huge amount of money generated by criminal activity appear to have come from a legitimate source. The united nations office on drugs and crime said global money laundering transactions account for roughly $800 billion to $2 trillion annually. Its a serious financial crime amongst white collar and street criminals readily exploiting the fast moving pace of technology advancement with financial transactions. In recent times, payments have experienced an unprecedented wave of technological innovations with the development of electronic method. criminals use crypto currencies for various purpose including laundering dirty money, monetizing ransom ware, scamming victims, defrauding investors. Crypto currency have the potential of making it easier for criminals to hide the source of their proceeds and move funds across borders without detection. According to Elliptic, as of 2019 only, $829 million in bitcoin has been spent on the dark web. Most central banks are determined to qualify crypto currency as facilitators for money laundering, they describe the system as unregulated cross-border space and it has high risk of loss of the invested capital.
Most crypto currency money laundering cases involves:
- Tumblers
- Unregulated exchanges
- Gambling and gaming sites
- Crypto currency ATMs
- Prepaid cards
- Peer-to-peer networks.
Crypto currency is not the only tool to perform illicit actions, we can focus on aspects we can use crypto currency to make a better financial system. Pen is a writing material and can be used as a murder weapon, that does not lead us to not using it.
What are the scare?
- Anonymity
- Difficulty to track their movement
- Lack of control.
Blockchain technology with cryptography and distributed consensus network has made privacy and security legit. Measures have emerged, regulations of virtual currency which aims at fighting anonymity in the crypto space for money laundering and the financing of terrorism. Legitimate exchanges follow regulatory requirements for identity verification and sourcing of funds which are AML compliant. When exchanges are regulated, they are required to apply KYC policies and protocols to their customers. The crypto system offers lots of advantages and criminals won’t stop exploiting the blockchain. Money laundering can be at a pass with tools that match customers data with transaction histories which will be more easier for MSBs to identify high risk customers and avoid associating crypto money with money laundering. Various solutions that can be implemented to contrast money laundering involving crypto currencies include:
- Strengthening AML procedures at financial institutions.
- Enhancement of transaction monitoring.
- Improving regulations.
Though there is still more work to be done but system professionals work on crypto transparency to prevent fraudulent acts and ability to track them when they occur. The advancement of the crypto space will guarantee safety.
There is a stop to money laundering in the crypto space. Making crypto currency a safe financial system should be an opportunity.
