Global Money Laundering Watchdog: Regulating Cryptocurrency

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Image of article titled Global Money Laundering Watchdog says Uh, Yeah, Better Regulate Cryptocurrency

Photo: OZAN ​​KOSE / AFP (Getty Images)

Cryptocurrencies must be brought under control by appropriate regulations, or risk fueling widespread crime and embezzlement, says the Financial action group, a global anti-money laundering watchdog, which released a new report on the subject on Thursday.

Established in 1989, the FATF is an intergovernmental decision-making body that has helped create and promote financial crime regulations in countries around the world. While it can’t actually force anyone to do anything, the FATF’s suggestions have gone a long way in guiding reforms designed to tackle money laundering, terrorist financing and other bad things. FATF is included from some 37 member jurisdictions, which means it has considerable influence in the global community.

Fittingly, the group has spent the last few years drafting policy suggestions related to digital currencies. On Thursday, the FATF published its latest report, presenting recommendations designed to eliminate crime in the industry, including urging crypto platforms to do more to verify the identities of their users and to report suspicious activity more regularly to federal regulators. This is pretty dense stuff, but the basic takeaway is this: adjust ASAP.

As such, the report appears to be more written on the wall for crypto enthusiasts who hoped digital currency would remain the fraud-infested ‘wild west’ that it always has been. Recent moves by the Securities and Exchange Commission, the creation of a new team of “crypto cops” at the US Department of Justice, and ongoing discussions by the Biden administration on expanded oversight, all seem to show a push to eliminate the freer ways of crypto.

Probably for good reason. While the new FATF report optimistically claims that with proper regulation, cryptocurrency could have “many potential benefits,” it also notes that, unsurprisingly, the industry’s worst belly regions are hotbeds pure criminal bullshit:

The majority of VA-related cases [virtual asset] offenses highlighted in the report focused on predicate or ML [money laundering] offenses, but criminals also used the VAs to evade financial sanctions and to raise funds to support terrorism. Types of offenses reported by jurisdictions include ML, sale of controlled substances and other illegal items (including firearms), fraud, tax evasion, computer crimes (for example, cyber attacks resulting in theft and ransomware), child exploitation, human trafficking, evasion of sanctions, and TF [terrorist financing].

The report takes a fairly unbiased look at the industry as a whole, with a particular focus on Decentralized Finance (DeFi), the area of ​​cryptography dedicated to replicating the functions of traditional banking.like trade and loans. In real terms, this means platforms that deploy automated software designed to negotiate financial transactions without third-party intermediaries. DeFi products and services have exploded in popularity in recent years, despite being linked to continuous fraud, cyber attacks and massive financial losses.

However, the FATF notes that just because these companies claim to be “decentralized” does not mean that they actually are.

“It seems fairly common for DeFi agreements to claim to be decentralized when they actually include someone with sufficient control or influence,” the report notes.

In other words, someone is still in control of your money — it’s just not a federally regulated financial institution or a legally responsible banking professional. Instead, it’s a person on the Internet. As a result, the FATF suggests that many DeFi entities should be subject to many of the traditional legal restrictions of “centralized” entities.

The report also regurgitates the widely held belief that cryptography has helped fuel the increasingly unbalanced underworld of ransomware: “VAs are a vital tool for ransomware actors, without which their underlying crime would be much greater. difficult to monetize. This makes the effective and consistent implementation of the FATF standards in this area all the more crucial. “

Let’s be honest: an industry without regulation is nothing more than a giant fucking scam that’s waiting to happen. Relevantly, time and once again cryptocurrency has proven that, for the most part, it’s really just an excuse for the smart and skeezy rich to To take advantage of the not-so-smart rich, and, of course, for cybercriminals have a day in the field.

In an ideal world, we wouldn’t have to deal with this totally made-up, eco-taxing a problem which now undermines the money and resources of the real. But, the world being what it is, regulation seems like a good idea, right? Yes.


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