Is crypto the solution, not the problem for money laundering?
by: Dynasty GI2021-07-22
A high profile regulatory specialist is making the case that, contrary to perception, cryptos can actually be the solution to tackle fraud and criminal activities, including money laundering.
According to Matthew Van Buskirk, a consultant and US government regulator, the answer to dealing with potential criminal activities using cryptos is to understand how the digital currency world works.
In an article for Payments Journal, the former Director of Regulatory Affairs at international consumer payments startup Circle.com said that, from an initial resistance towards the crypto world, law enforcers are beginning to understand how to take advantage of its characteristics. He gave the example of how improved understanding of blockchain analytics helped the US Department of Justice quickly trace and seize the proceeds from the recent Colonial Pipeline ransomware attack. And how, according to officials involved with the case, the recent arrests related to Bitcoin Fog and a human trafficking ring in Latin America happened because of the bitcoin the suspected ringleader would have used to try to launder the proceeds from his operations. Van Buskirk does not deny that there is criminal activity happening in the crypto world but, quoting a report put together by Coinbase, he argues that the focus on cryptocurrencies may be misguided. The report showed that cyber-crime has grown significantly during the pandemic but that the proportional level of criminal activity using cryptos actually fell between 2019 and 2020. The report also showed that, whilst the UN believes up to US$2 trillion are laundered through the traditional global financial system every year, more than 99 per cent of crypto transactions now run through regulated exchanges that are subject to Know Your Client (KYC) and Anti-Money Laundering (AML) requirements to help curb illicit activities.
"Dynasty Global Investments co-founder and CEO, Eduardo Carvalho, agrees with Van Buskirk’s assessment: “Sadly, any economic activity is open to abuse or criminal activities, and the crypto world is not immune to that. It is crucial that committed crypto businesses like Dynasty apply best practices such as KYC and AML procedures to not only help reduce the risk of criminals using the crypto system but also to make the digital finance sector as a whole safer for everyone”."