FINANCIAL CRIME: REGULATION OF CRYPTOASSETS
R&C: Could you provide an overview of how criminals are using cryptoassets to move and launder the profits of financial crime? What methods and new approaches are you seeing?
Kimatrai: Cryptoassets operate in an anonymous or pseudoanonymous manner, making them a good vehicle for financial crime. Generally characterised by non-face-to-face client relationships, they may permit anonymous funding and transfers through exchanges that may not properly identify the source or destination of funds. Individuals can exploit this anonymity to launder profits and hide the source of illicit funds. Fraud and scams can occur, with the same individuals committing crimes without detection. In addition, cryptoasset systems can be accessed via the internet, including via mobile phones, and we are increasingly seeing cryptoassets being used to make cross-border payments and fund transfers by criminal actors looking to evade the sanctions and controls in place in conventional financial systems. It is important to note that while cryptoassets can be used for illicit activities, the overall impact on financial crime is small when compared with cash transactions. Blockchain technology provides a public record of each transaction, meaning that exposure to the risk of financial crime can be managed with appropriate regulation and technologies including blockchain analytic solutions.
Oct-Dec 2023 Issue
Gibson, Dunn & Crutcher
Norton Rose Fulbright LLP