Switzerland’s FINMA warns of money laundering risks with crypto

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As a seasoned crypto investor with a decade-long journey through the digital asset landscape, I’ve witnessed the evolution of this industry from its infancy to its current maturity. While the potential of cryptocurrencies is undeniable, the recent warnings by regulatory bodies like FINMA and the U.K.’s Financial Conduct Authority about money laundering risks can’t be ignored.

The Swiss Financial Market Supervisory Authority has issued a statement highlighting potential money laundering dangers linked to digital currencies such as cryptocurrencies.

According to a recent report by the regulatory body in 2024, it has been observed that digital currencies such as cryptocurrencies and stablecoins are frequently employed in cyberattacks, transactions related to illicit activities on the dark web, and for bypassing sanctions associated with geopolitical disputes.

In recent times, there has been a significant surge in the use of stablecoins for illegal activities like sanctions evasion, making it more challenging to enforce anti-money laundering regulations.

To counteract the dangers of money laundering, FINMA detailed their expanded strategies. These include conducting on-site inspections, revising their auditing procedures, and emphasizing risk assessment and management for businesses dealing with politically influential individuals or regions associated with high-risk zones.

Regarding digital assets, FINMA has made it clear that they will tailor their strategies to minimize money laundering risks for each institution. This means they’ll focus on specific measures for each institution to ensure effective management of potential weaknesses.

This year, regulatory bodies released guidelines focusing on mitigating risks related to stablecoins. These guidelines stipulate that the issuers must confirm the identities of both the token owners and those who ultimately benefit from the ownership.

Additionally, the regulatory body warned that unregulated crypto-related businesses failing to implement adequate risk controls may encounter potential legal issues and harm to their professional standing.

Worldwide, the regulation of cryptocurrencies and associated businesses is under close examination due to possible associations with money laundering and illegal activities. This has led to a heightened level of scrutiny and demands for improved supervision in various regions.

In May, it was noted by the British Financial Conduct Authority that crypto asset companies were one of the industries at highest risk for money laundering in the years 2022 and 2023. To mitigate these potential threats, the regulatory body has established a thorough registration procedure for cryptocurrency businesses.

Various platforms such as Binance, KuCoin, among others, have been under investigation regarding accusations of involvement in money laundering incidents throughout their operations.

For years, Tether, a company responsible for issuing the biggest stablecoin, USDT, has been under scrutiny due to allegations suggesting they help in concealing illegal activities such as money laundering.

Lately, the company is facing renewed attention following news that the U.S. Department of Justice might be investigating possible breaches of sanctions and anti-money laundering laws. Yet, they have refuted any allegations, asserting they haven’t found any signs of an investigation being conducted.

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2024-11-20 14:00