ENHANCED ANTI-MONEY LAUNDERING METHODOLOGIES FOR CRYPTOCURRENCIES
Since it first began to garner mainstream attention, one of the biggest knocks against Bitcoin, and cryptocurrencies in general, was the ability for individuals or entities to use cryptocurrencies to transfer and transact money used in illegal activities. For years, most conversations surrounding cryptocurrencies at some point referenced criminal acts, such as money laundering, terror financing or drug and weapon purchases. Bitcoin was depicted as the legal tender of the dark web, facilitating the dreams of the world’s most villainous people.
Truthfully, this is quite an ironic position to hold. The list of major financial institutions that have paid hefty fines and settlements, from the notorious case of HSBC in 2012 to Western Union’s $586m settlement in 2017, is lengthy and growing. Just this past February, US Bank was forced to pay $528m in what was another stern wrist-slap for one of the most powerful financial institutions in the world. Since 2009, US and EU regulators have fined banks over $342bn for misconduct, a number that is expected to grow to over $400bn by 2020.
Though cryptocurrencies have been used to finance illicit activities in the past, to pretend this is a phenomenon unique to the likes of Bitcoin and Ethereum is misguided, at best. Rather than focusing on innovative and emerging technologies to combat money laundering, banks, in an archetypal pot-kettle situation, will often refuse to do business with cryptocurrency firms.
Apr-Jun 2018 Issue
BANKEx