Blockchain Makes Money Laundering Risks Greater, Says Swiss Regulator
The Swiss Financial Market Supervisory Authority warned that blockchain tech increases the risk of money laundering in the country.
The Swiss Financial Market Supervisory Authority (FINMA) warned the country that Switzerland is particularly prone to money laundering risks for reasons including the use of blockchain technology.
In its first-ever yearly risk monitor report — published by FINMA on Dec. 10 — the regulator warns that blockchain and crypto assets exacerbate the country’s already existing money laundering risks. The document reads:
“In addition to […] traditional money-laundering risks, the financial industry also faces new risks in the area of blockchain technology and the cryptoassets that are attracting growing interest from clients.”
Money laundering slows crypto adoption
The regulator admits that, while these new technologies promise efficiency improvements in the financial industry, they also increase the threats of money laundering and terrorism financing. The regulator believes that the purportedly greater potential for anonymity and the speed and global nature of such financial tools make them attractive instruments for criminal use.
The report also states that crimes like money laundering could slow the adoption of nascent technologies like blockchain:
“Malpractice by the financial institutions active in FinTech could significantly damage the reputation of the Swiss financial centre and slow down the development of digitalisation.”
Other than blockchain, FINMA also noted Switzerland’s status as a private wealth management hub as a contributor to the high risk of money laundering in the country. Furthermore, the agency stated that shrinking profit margins for banks may tempt institutions to accept clients from high-risk emerging markets.
For better or worse, money laundering concerns are already slowing the adoption of crypto assets. As Cointelegraph reported, a recent joint statement adopted by the Council of the European Union and the European Commission reads that no global stablecoin project will begin operation in the EU until the perceived risks like money laundering and tax evasion are addressed.
In order to stay compliant, exchanges have started delisting cryptocurrencies that provide higher privacy standards. For instance, at the end of November, cryptocurrency exchange BitBay will delist privacy-centric cryptocurrency Monero (XMR) due to money laundering concerns. In September, crypto exchange OKEx did the same to many privacy-focused coins.
Powered by WPeMatico