There are several issues or complaints about Cryptocurrency. One such issue is money laundering. This often gets a special place in the mainstream media as a particular problem of digital currencies. They show various reasons to accuse Cryptocurrency of this flaw. No regulatory bodies are controlling Crypto and there is a complete lack of control over these currencies with the help of bitcoin buyer to regulate the crypto.
- Other causes are no requirement of KYC details, its covert nature, and the ability to transfer assets to any part of the globe.
- These are certain major points that give the critics valid reasons to accuse Cryptocurrencies of making money laundering an easier task.
- But, there exists another class of analysts who say that digital currencies are a weak source of laundering money.
- This class argues that Cryptocurrencies are made of Blockchain technique and it is easier to track the wallets. This can make the task tougher than said.
So, the topic is quite intriguing and may lead to debates. The founder and CEO of ComplyAdvantage, which works for providing anti-money laundering techniques, discusses this issue in detail.
How Large Is The Issue Of Money Laundering In Cryptocurrency?
ComplyAdvantage is a leading brand working against financial crimes and helps organizations manage this issue.
- Concerning this question, the CEO of this platform says that Cryptocurrencies are capturing the market very soon.
- Around 98% of the firms are starting to accept payments in Cryptocurrency.
- Also, they are planning to offer services that are based on Cryptocurrencies in the future.
- In this matter, the aspect of risks that may come with such features of digital currencies should be kept in mind by the firms.
- But, another matter should be seen as well. The number of illegal activities with Cryptocurrencies is very small in amount.
- The market of digital currencies is expanding very fast and in comparison to this, the amount of illegal financial activities is very small.
How Easy Is The Route Of Cryptocurrency Than The Traditional One For Money Laundering?
The CEO of the organization says that often we can see the line of difference for both the traditional and Cryptocurrency firms.
- In both these boards, the concerns and issues of fraud accounts, money mules, identity theft, and similar others.
- But Cryptocurrency has its feature of anonymity which can be a negative point.
- The payments or the transfers take place through a decentralized network.
- In such networks, the factors of anti-money laundering are absent.
- Also, due to this feature, there is no system for recording the transactions on any public boards.
- These factors make it a very challenging task to find out or trace illegal activities.
A Quick Description Of How Money Laundering Can Take Place Through Cryptocurrency
The founder of ComplyAdvantage was also asked to provide a quick description of how money laundering can take place through cryptocurrency. And he provides a brief discussion over it. He says that the prime principles of laundering are the same for both boards.
- In the first place, the criminals will place illegal money into any financial system.
- Then, they will work on its layering so that it becomes harder to trace.
- And in the last step, they will extract that amount.
- But, in the case of Cryptocurrency, the second stage of layering. They use both traditional and Cryptocurrency exchanges to cover up the origin.
The Role of Decentralized Exchanges To Avoid Sanctions And Money Laundering
On this question, he says that these DEXs are not under any regulation at present.
- There are no regulations for the matters of money laundering, anti-terrorism finances, monitoring the transactions, etc.
- All of these factors are attracting more risks of such sanctions and evasion.
- In addition to this, the anonymity of these coins helps in further making them harder to trace.
- All such outlets need to work on the safeguarding measures and verification processes.
The concerns of money laundering in Cryptocurrency platforms are not false. The cases of such financial crimes are taking place with each passing day.
But, the share of such crimes in the Cryptocurrency outlets. The share of financial crimes in traditional outlets is more prominent. Still, there should be regulations to a certain extent so that it will be easy to trace the crimes.