APPLICATION

Swiss regulatory authority: Blockchain increases money laundering risks

2019/12/16

The Swiss Financial Market Supervisory Authority (FINMA) has issued a warning regarding blockchain in the country, citing increased money laundering risks due to the use of blockchain technology.

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According to the first annual risk monitoring report published by FINMA on 12/10, blockchain and cryptocurrencies have exacerbated the existing money laundering risks in the country. The document states:

In addition to traditional money laundering risks, the financial industry faces new risks in the blockchain technology and cryptocurrency space, attracting more illicit customers.

Money laundering hinders the adoption of crypto technologies

FINMA acknowledges that while these new technologies hold the potential to enhance efficiency in the financial industry, they also increase the threats of money laundering and terrorist financing. Regulatory authorities believe that the potential for anonymous money laundering is greater, and the speed and global nature of such financial instruments make them attractive tools for criminal use.

The report also points out that criminal activities such as money laundering could slow down the adoption of emerging blockchain technologies:

Illegal money laundering activities active in the fintech sector could seriously damage the reputation of Switzerland's financial center and slow down digitization.

The concerns about money laundering have already slowed down the adoption of cryptocurrencies, as indicated in a recent joint statement by the European Council and the European Commission, stating that global stablecoin projects will not start operating within the EU until perceived risks such as money laundering and tax evasion are addressed.

Ukraine approves final version of anti-money laundering law

The Ukrainian legislative body, Rada, released the final version of the law on 12/6, mentioning that virtual assets are one of the means of storing value, while also highlighting the potential risks of virtual assets in financial crimes such as money laundering, fraud, and financing.

The new law includes some guidelines on how the government intends to monitor and regulate cryptocurrency transactions. One criterion involves individual crypto transactions worth less than $1,300, where the government will collect the sender's public key for financial monitoring.

When transactions exceed that amount, the government has the authority to verify both the sender and receiver. This process will include identity verification and verification of the nature of the business relationship.

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